- Declining volume alongside the price drop could spark a rebound.
- The difference between OI and funding rate could be bullish for SOL.
Solana [SOL] hinted at a move to $200 on March 26, with the cryptocurrency later falling to $185.
According to CoinMarketCap, SOL’s value has fallen 4.76% over the past 24 hours, showing how support on an upward trajectory has been filled with struggle.
However, AMBCrypto was able to identify signals that the attempts to retest $200 could soon be successful. To do this, we used some on-chain metrics.
The weakness of bears is the strength of bulls
One of the metrics we started with was Solana’s volume. Two weeks ago the volume was more than 14 billion. This was around the same time that SOL rallied to 209.
But at the time of writing, the book was dropped to 3.34 billion, indicating a massive drop in trading of the token.
Decreasing volume is not entirely bad, however. Typically, rising volume amid rising prices indicates that a rally could continue.
When volume decreases along with price, it means the downtrend is becoming weak. So an upward reversal could be likely.
Source: Santiment
For SOL, it is possible that the value will increase in the coming days. If this is the case, bulls could try to pull the price towards the $200 zone.
If buying pressure increases, Solana’s native token could retest its price.
Despite the forecast, AMBCrypto admitted that the potential rally may not go smoothly. But despite this, SOL could reach the zone before March ends or in the first few days of April.
Reward is for the patient
In addition to the volume and price action, we also analyzed Solana’s financing rate and open interest (OI). The funding ratio indicates whether longs pay a fee to shorts, or whether it is the other way around.
Positive financing means longs pay shorts, while negative implies longs receive the fees.
When the Open Interest increases, it means that the net positions and liquidity added to the derivatives market have increased. On the other hand, a decrease in OI indicates an increase in the number of contracts closed.
At the time of writing, SOL’s funding rate has increased, indicating that longs had more positions. However, the price drop indicates that these positions were not rewarded.
Source: Santiment
This usually produces a bearish inference. However, the OI declined around the same period, indicating that shorts were aggressive.
From a trading perspective, the drop in OI along with the price drop, combined with funding, is a sign that SOL could be breaking out.
Read Solana’s [SOL] Price forecast 2024-2025
Essentially, the short-term outlook could push SOL to dive into overhead resistance. Should buying pressure increase in the coming days, the token could break any hurdle.
From a bullish perspective, SOL could try to reach $209 again. However, traders may need to be wary as changes in statistics could invalidate the projection.