Solana Faces Critical Market Pressure as Technical and On-Chain Signals Flash Warning

article image source: cryptonewsz.com (link)

Solana Faces Critical Market Pressure as Technical and On-Chain Signals Flash Warning

Solana (SOL) has entered a pivotal phase in its market cycle after a sharp multi-week decline pushed the cryptocurrency toward major support levels. A mix of macroeconomic uncertainty, weakening derivatives activity, and fading investor confidence has intensified selling pressure, raising questions about whether Solana is nearing a deeper correction—or preparing for a potential rebound.

Market Turbulence and Macroeconomic Pressures

Solana’s downturn began amid broader financial market stress. U.S. equities wiped out trillions in value, and the absence of updated labor-market data from the Bureau of Labor Statistics added an unusual layer of uncertainty ahead of the Federal Reserve’s December FOMC meeting.

Without fresh employment data, policymakers must determine their next steps on interest rates in the dark. This has led traders to scale back expectations of a December rate cut—an environment that typically weakens appetite for risk assets like cryptocurrencies.

Solana reflected that shift quickly: its price slid from around $171 to nearly $134 in just two weeks, reducing its market capitalization significantly. The decline was compounded by a marked reduction in user engagement and stagnating activity in derivatives markets, signaling hesitation among speculative traders.

Derivatives Market Stalls at Multi-Month Lows

Open interest (OI) in SOL futures remains stuck around $7.3 billion, a level that has barely moved since early October. Such stagnation typically reflects a lack of fresh speculative capital and a wait-and-see attitude across the market.

Funding rates near zero and evenly balanced long/short ratios further illustrate muted conviction. After SOL plunged from $230 to below $130 previously, traders appear cautious about re-entering aggressively.
With derivatives activity flat and ETF inflows weakening, sidelined capital suggests that market participants are waiting for clearer signals before making big moves.

Approaching a Long-Defended Support Zone

SOL now trades just above a long-term support trendline near the $130 level—a region that has historically triggered strong recoveries since late 2023.
Each previous retest of this zone sparked renewed buying activity and revived Solana’s uptrend.

However, the current pullback is accompanied by rising trading volume, hinting that sellers are not just taking profits but are actively pushing for a deeper correction. Should this major trendline fail, the next significant downside target appears near the $100 zone.

Technical Indicators Signal Deepening Bearish Momentum

Across multiple timeframes, Solana’s technical indicators show a decisive tilt toward bearish momentum:

The Relative Strength Index (RSI) sits in the mid-30s, sliding closer to oversold territory and suggesting intensified selling pressure.
The Awesome Oscillator (AO) is deep in negative territory, with expanding red bars that point to growing downside momentum.
On the daily chart, SOL has broken below a rising wedge pattern and is forming consistent lower highs and lower lows—classic signs of a sustained downtrend.
The MACD remains negative, with bearish crossovers reinforcing downward momentum.
The Money Flow Index (MFI) sits around the mid-20s, indicating capital outflows and subdued buyer interest.

Together, these signals strongly indicate that bulls are losing control and that the path of least resistance, for now, is lower.

On-Chain Data Highlights Fragile Investor Confidence

Investor behavior on the blockchain also supports the bearish outlook.

Long-term holder sentiment is weakening:
The Long-Term Holder Net Unrealized Profit/Loss (LTH-NUPL) metric has slipped into the Hope zone—a stage where holders remain in modest profit but their confidence begins to waver. This often occurs before larger shifts in market direction.

Short-term holders are contributing to selling pressure:
Recent activity shows that groups who acquired SOL within the past week to three months have been offloading tokens. When short-term investors turn to selling, volatility typically rises and downtrends accelerate.

The combination of cautious long-term holders and active selling from short-term holders paints a picture of a market searching for stability but not yet finding it.

Where Could Solana Go Next?

If selling pressure continues, SOL may test deeper support levels. The next major threshold lies around $94–$100, a region highlighted by Fibonacci retracement levels and historical price interaction.

However, this bearish outlook is not set in stone. If buyers regain momentum and push SOL decisively above its current range, the price could rebound toward the $155 zone—aligned with the 0.382 Fibonacci level.

Watchers should pay close attention to:

A rebound in derivatives open interest
A shift in RSI above the neutral 50 line
Strengthening inflows and improving MFI readings
Renewed accumulation from both long-term and short-term holders

These would indicate that market sentiment is turning and that Solana may be ready for a recovery.

Conclusion: A Critical Moment Filled With Opportunity

Solana now sits at a defining crossroads. The combination of macroeconomic uncertainty, weakening speculative activity, and broad-based selling has created meaningful pressure—but also an environment where strong reversals often originate.

Historically, Solana’s long-term support zones have served as launchpads for major rallies. Whether the market repeats that pattern depends on upcoming Fed decisions, shifts in investor sentiment, and the willingness of buyers to defend key levels.

For long-term believers, periods of fear and hesitation often precede phases of renewed strength. Solana’s fundamentals—including its high-performance network and expanding ecosystem—remain intact.
If confidence returns, today’s uncertainty could eventually be remembered as one of the market’s defining accumulation zones.

Sources