- Solana’s long-term liquidations totaled $11 million as of April 2.
- Open interest on futures has fallen since the beginning of the month.
Solana [SOL] witnessed a wave of long liquidations on April 2, when the coin’s price fell below $180 during that day’s trading session. According to Mint glass According to data, SOL’s long liquidations totaled $11 million, a two-week high.
Liquidations occur in a currency’s derivatives market when a trader’s position is forcibly closed due to insufficient funds to maintain the position.
Long liquidations occur when the value of an asset suddenly drops, forcing traders who have open positions in favor of a price increase to exit their positions.
By comparison, short liquidations totaled $3 million on the same day.
The performance of the SOL futures market
AMBCrypto’s assessment of SOL futures market activity revealed a steady increase in bearish sentiment since the beginning of the month.
First, the currency’s open futures rate, which measures the total number of futures contracts that have yet to be settled or closed, has been on a downward trend since April 1.
At the time of writing, SOL’s open interest has fallen 20% since the beginning of April at $2.88 billion, according to Coinglass data.
When an asset’s open interest falls in this way, it suggests that market participants are exiting their trading positions without opening new ones.
While the funding rate on cryptocurrency exchanges remained positive, it had fallen nearly 90% since April 1 and was at a 60-day low at the time of writing.
Source: Coinglass
The decline in SOL’s funding rate is notable because it indicates that demand for long positions is declining. It indicates that long traders are exiting their positions primarily to make a profit.
When long traders start to pull back in this way, it means the market is overheating. It also suggests that bullish momentum is weakening.
This often leads to a decrease in buying pressure, which ultimately results in a decrease in the price of the underlying asset.
Read Solana’s [SOL] Price forecast 2024-2025
Is SOL losing its reputation?
The gradual peak in bearish sentiment in the SOL market coincides with a decline in the coin’s social activity. According to Santiment data, SOL’s social dominance and social volume have dropped by 50% and 57% over the past two weeks.
Source: Santiment
A decrease in an asset’s social activity means the asset enjoys less engagement across social media platforms. This often occurs when bullish sentiment begins to wane.