Solana Faces Bearish Pressure as Price Drops 10%, Triggering $64 Million in Long Liquidations

Solana (SOL) has been on a downward trend lately. After hitting a new high of $264.63 on November 22, it has faced a wave of selling pressure.

In just a week, SOL's price has dropped by nearly 10%. This decline has led to an increase in long liquidations in the SOL futures market. With bearish sentiment rising, long traders may be in for more losses.

To put it simply, that 8% price drop has wiped out $64 million in long positions. Long liquidations happen when traders, who bet on prices going up, are forced to sell as prices fall. When the price drops below a certain point, they have to exit the market to cover their losses.

This situation is a clear bearish signal for SOL. As long traders try to minimize their losses, their selling can create even more downward pressure on the price.

Additionally, the decline in SOL's price has significantly impacted its derivatives market. Right now, the open interest sits at a weekly low of $3.34 billion. Open interest refers to the total number of active contracts that haven't been settled yet. A drop in open interest during a price decline means traders are closing their positions. This shows less market participation and a lack of confidence in a price rebound.

The Awesome Oscillator for Solana confirms this bearish trend. As SOL's price has fallen, the indicator has shown red histogram bars. This tool helps identify price trends and potential reversal points. Red bars suggest that short-term momentum is weaker than long-term momentum. This indicates a possible bearish trend or a decrease in bullish strength.

If selling picks up more speed, SOL's price could break below the crucial support level at $231.54. A drop below this point would likely push SOL down to around $205.56. On the flip side, if buying pressure builds, there’s a chance SOL could rise back toward its all-time high of $264.63.