Key points:
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SOL dropped 9.5% as $30 million in long liquidations took place.
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A bearish divergence in futures CVD and elevated funding rates suggests that a long squeeze triggered the correction.
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Support at $180 and a recent golden cross hint that the bullish continuation is still in play.
Solana (SOL) dropped 9.5% on Wednesday, dipping to $186 from $205, potentially forming a bearish engulfing pattern on the daily chart. A close below $190 would mark its most significant daily drawdown since March 3, when SOL dropped more than 20%.
SOL futures faced a sharp correction as $30 million in long positions were liquidated, following its open interest (OI) hitting an all-time high of $12 billion. Despite the price still sitting 36% below its all-time high, the elevated OI suggests traders may be unwinding long positions and locking in profits.
Several key onchain indicators hinted at the correction. Net taker volume turned sell-heavy, showing that more aggressive trades were executed on the sell side. This shift was backed by a drop in aggregated spot cumulative volume delta (CVD), which tracks whether buyers or sellers are more active, signaling that holders likely took profits near the $200 level.
Interestingly, the aggregated futures CVD steadily declined even as prices rose, suggesting that futures sellers gradually increased their positions, a bearish divergence preceding the drop.
Additionally, funding rates reached their highest point in the past quarter, pointing to an overcrowded long trade. The elevated funding and OI levels created the perfect setup for a long squeeze, forcing over-leveraged traders to exit positions under pressure.
Related: MoonPay launches Solana staking as investor demand for onchain yield grows
Is this a SOL dip to buy?
While the sudden 9% drop in SOL may raise short-term concerns, it follows a substantial 56% rally over the past 30 days. Such a pullback is often a healthy reset, especially after aggressive upside momentum. Technically, the daily chart remains constructive, with $180 emerging as the key support for bullish continuation.
SOL confirmed a bullish break of structure (BOS) earlier this week by reclaiming the $180 level, marking the first major bullish trend shift on the one-day time frame since November 2024. This BOS also triggered a golden cross between the 50-day and 200-day exponential moving averages (EMAs), a classic bullish signal. The last time SOL saw this crossover, the price surged over 730% between October 2023 and March 2024.
A positive price reaction and support hold around $180 would reinforce bullish momentum. However, failure to defend this level could open the door for a deeper correction toward the $168–$157 zone. This range aligns with both a daily fair value gap, a zone of prior market imbalance, and the 0.5–0.618 Fibonacci retracement levels, often considered a high-probability technical retest area.
Related: SOL news update: Solana treasury building activates rally toward $240
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
