Solana (SOL), a popular blockchain platform known for its fast transaction speeds, has seen a welcome surge in price, reaching the $160 mark this week. This 13% increase comes after a month of sluggish performance, mirroring the broader cryptocurrency market slump. However, analysts warn that this upward trend might be short-lived due to looming liquidity concerns.
The recent price jump coincides with renewed interest in cryptocurrency following the attempted assassination of US presidential candidate Donald Trump. This broader market optimism has undoubtedly impacted Solana, but the real driver seems to be the anticipation of a Solana ETF (Exchange Traded Fund). The possibility of an ETF has fueled buying pressure, pushing the price upwards.
Technical indicators suggest a potential further rise, with some analysts predicting Solana could reach $175 if the current momentum continues. However, this bullish outlook comes with a caveat: a potential price correction triggered by liquidations.
Data from crypto analyst Ali Crypto reveals that a staggering $2.98 billion worth of short positions are poised to be liquidated if the price hits $176. This means that a significant number of investors who bet on Solana’s price to fall will be forced to buy back their positions, causing a temporary price drop.
For a sustained bull run, Solana needs to overcome this $176 hurdle. If successful, some analysts, like Captain Faibik, believe the token could even reach $1000.
But is this rally sustainable? Despite the current bullish push, there are signs of potential trouble. Analysts are noting a drop in weighted sentiment, suggesting a growing bearish undercurrent. This is further emphasized by Solana’s recent failure to break through the $163 resistance level, indicating a possible pullback.
The Long/Short Ratio on Coinglass, a metric that measures market positioning, is also dropping, hinting at a potential correction before the rally resumes. Additionally, excessively bullish user sentiment, often associated with market exuberance, could also lead to a correction as overheated buying eventually cools down.
The future of Solana hinges on several factors. The approval of an Ethereum ETF has already boosted demand for alternative blockchains like Solana, and a similar ETF for Solana could propel its price to new heights, potentially even surpassing Ethereum. However, the immediate concern remains the potential $3 billion liquidation hovering over the $176 price mark. Only time will tell if Solana can weather this storm and continue its upward climb.