Solana is facing ongoing challenges, experiencing a 15% decline over the past week with no signs of recovery expected this weekend.
On-chain metrics indicate that participants in the futures market are reducing their activity while short-term holders are increasingly selling off their assets. These trends suggest that Solana may continue to see losses, potentially testing the $200 level in upcoming sessions.
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Solana Faces Increasing Pressure
The recent decline in SOL’s price is correlated with a decrease in futures market open interest, indicating reduced market engagement. According to Coinglass data, the open interest currently stands at $14 billion, a drop of 17% since September 19.
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Open interest measures the total number of unsettled futures or options contracts and serves as an indicator of trader activity and capital flow into an asset.
A decline in open interest alongside the asset’s price suggests that traders are closing positions rather than opening new ones. This reflects diminishing confidence in SOL, indicating a selling trend primarily driven by exiting traders.
Additionally, the overall weak performance of the broader market has further decreased the confidence of SOL’s short-term holders.
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According to Glassnode, an evaluation of the Net Unrealized Profit/Loss (NUPL) for SOL’s short-term holders reinforces this weak sentiment. Currently, the NUPL stands at 0.039, indicating that these holders’ attitudes are fluctuating between the Hope and Fear zones.
This indicates that, on average, short-term holders are barely profiting, with many very close to break-even.
Historically, when NUPL is in this range, short-term holders tend to be highly sensitive and may capitulate at the slightest hint of weakness. This increases the risk of continued declines for SOL.
SOL Targets $195 If Buyer Engagement Remains Low
If these trends continue and buyer demand does not strengthen, SOL could dip below the crucial $200 support level, potentially falling to $195.55.
On the other hand, a surge in buyer interest could stabilize the altcoin and avert further losses, possibly rising its price to $219.29.
