Solana Price Setting a Bear Trap? Here’s the $2B Signal to Watch

Solana Price Analysis

Solana price fell towards $152 on Saturday, Aug 10, down 7% in the last 24-hours as bulls who bought dip during SOL’s 49% weekly timeframe rebound begin to  count their gains, derivatives markets data suggest the ongoing correction could be a bear trap.

SOL Retreats from $160 Resistance as Bulls Book Profits.

This past week, Solana price posted a highly volatile movements, influenced by both technical and fundamental factors. Starting the week on a negative note, SOL was recovering from the sharp downturn experienced during the August 5th market crash, where it plunged by over 11% in a single day.

However, the tide began to turn mid-week as bullish momentum picked up, driven by favorable news from Brazil.

On August 8th, news broke that Brazil had approved a Solana ETF, providing a significant boost to SOL’s price. The news helped propel a 12% rally within just 24 hours, establishing a strong support base above the $150 level. This bullish sentiment was further fueled by speculation that VanEck’s Solana spot ETF application in the U.S. might also gain approval, driving initial optimism.

Nevertheless, this bullish news quickly profit-taking wave especially among short-term traders who had already seen a 49% rebound in SOL’s price between August 5th and August 9th.

As SOL reached a weekly peak of $158, many traders opted to lock in profits rather than hold out for a potential breakout above $160. This profit-booking triggered a 7% decline in SOL’s price within the following 24 hours, demonstrating the market’s sensitivity to short-term fluctuations.

However, recent movements in the SOL derivatives market suggest that this correction may not be the end of the rally, with potential for further upward movement if support levels hold.

Solana Open Interest Holds Above $2B Despite 7% Correction

Despite the recent 7% correction in Solana’s price, the open interest in SOL futures has remained resilient, holding above the $2 billion mark. Open interest, which represents the total number of outstanding futures contracts, is often used as an indicator of market sentiment and liquidity.

From August 8th to August 10th, SOL’s open interest saw a modest decline from $2.25 billion to $2.20 billion. This 2.2% decrease in open interest is significantly less than the 7% decline in SOL’s price during the same period.

During a market correction phase, when Open Interest declines slower than the price dip, as observed in the SOL/USD derivatives markets this week, it signals  majority of traders consider the recent 7% pullback to be a temporary correction rather than the start of a prolonged downtrend.

As Solana Open Interest continues to hold above $2 billion, it hints that traders are currently opting to pay increased Funding Rates to keep their positions open rather than close them out in panic.

Alternatively, it could suggest a bear trap, where the market lures in short-sellers before a potential reversal.  SOL open interest staying above $2 billion, despite the 7% price correction, indicates that LONG traders are leaning towards a consolidation around the $150 level as markets await the next major catalyst.

SOL Price Forecast: Dominant Bulls Eyeing $160 Breakout

Solana’s (SOL) price action suggests that bulls remain in control despite recent volatility. The price is currently hovering around $153, close to key support provided by the 20-day Simple Moving Average (SMA) at $163.98. This level could serve as a springboard for a potential breakout.

The recent pullback towards the lower Bollinger Band at $130.04 appears to have been a temporary correction, with SOL bouncing back swiftly. The next significant resistance level is at $160, a psychological barrier that, if broken, could open the door for a move towards the $170-$180 range.

However, the Detrended Price Oscillator (DPO) indicator shows negative momentum at -12.31, signaling that the bulls need to sustain buying pressure to overcome this resistance. If SOL can close above $160 in the coming sessions, it would confirm the start of a new bullish phase, potentially leading to further gains.

Overall, the dominant bullish sentiment suggests that a $160 breakout is likely in the near term, with key support levels to watch around $150 and $130. Bulls should remain cautious, however, as failure to break above $160 could lead to further consolidation or a retest of lower support levels.