Solana’s outlook bearish, fund rate now negative

Solana recently breached through the 135 support line on the first trading day of this month, The smart contract network’s token could extend losses by sweeping liquidity at the $130 support. This is an important tier of support for the altcoin.

Solana’s (SOL) current price is $133.85; over the past day, it has decreased by -1.11 percent, at the time of writing. Trader sentiment has shifted to bearish, at least temporarily, due to Solana’s recent decline. The funding rate for SOL has gone negative for the first time since August 23 according to important data from Coinglass.

A negative funding rate, means traders pay to keep their short bets against SOL because short positions now outweigh long positions.
This change in attitude indicates that traders are beginning to anticipate more price declines for Solana. Several traders and analysts are projecting a decline toward important support levels, contributing to the bearish sentiment.

If SOL can’t maintain its current levels, this bearish scenario may come into play. Such a drop would denounce the digital asset’s ability to hold onto its past gains this year in jeopardy and validate the bearish sentiment driving the market.

Solana’s short-term trajectory will be determined by its capacity to recover and possibly rebound as the market responds to this pressure.

Should Solana witness a daily candlestick close surpassing significant resistance at $148, it could refute the bearish hypothesis and allow SOL to extend gains to $160. SOL could extend losses into the Fair Value Gap (FVG) between $119 and $126

This represents the 50% Fibonacci retracement level of the drop from the $210 point 18 peak on March 18 to the $110 low on August 5.

The 50-period EMA, presently at $139, keeps stopping any attempts at rising. More losses could be observed toward the $123.95 and $116.55 support levels if Solana can’t break above the $136 resistance.

If the descending channel is broken, the sell-off could pick up speed and move the price closer to $110. On the other hand, a break above $136 might aim for the levels of $152.18 and $143.83.

It’s also possible that the SOL chain, the meme coin engine, has reached its limit, a similar result to 2023 is anticipated. Although meme coins led gains in the first half of 2024, other sectors outperformed them, and traders probably became more cautious because of recent macroeconomic developments.