Solana’s Shorts Burn as $190 Test Looms: What’s the Secret Sauce? 🤔🔥

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  • SOL clung to Fibonacci support like a cat to a tree, building bullish momentum even as spot volume plummeted by 30%.
  • Solana’s short liquidations and rising funding rates confirmed that traders were as bullish as a bull in a china shop around the $185 mark.

Solana [SOL] flashed a textbook cup-and-handle breakout on the weekly chart, with price action now testing a key resistance zone between $180 and $210. This setup, often followed by explosive upside when confirmed, aligns with the market’s newfound optimism. At press time, SOL traded at $176.80, down 1.07% on the day. Yet, both crowd and smart money sentiment remained firmly positive, with respective scores of 0.63 and 1.45. Naturally, this raises the question—can bullish conviction carry the breakout through?

Are rising rates fueling the rally?

The derivatives market reveals a sharp increase in trader activity, as if the bulls had discovered a secret stash of Red Bull. Funding Rates flipped positive, with the OI-Weighted reading at 0.00999% as of the 23rd of May. This suggests traders are paying a premium to hold long positions, reflecting bullish expectations. Meanwhile, total Open Interest rose 8.25% to $7.86B, confirming rising conviction in the rally. Options Volume also surged 38.12% to $1.64M, highlighting speculative appetite.

Will short squeezes drive the next leg up?

As per the Liquidation Heatmap, Solana hovered just below a liquidation cluster between $185 and $190. Over $7.9M worth of shorts were wiped out recently, dwarfing $1.81M in long-side liquidations. Notably, Binance and Bybit contributed a large share of this pressure. This imbalance could amplify volatility, as further upside may trigger cascading liquidations of overleveraged shorts. Therefore, if the price pushes beyond $187–$190, SOL could enter an accelerated breakout phase as short sellers scramble to close positions.

Despite bullish indicators, spot volume has dropped significantly, falling over 30% to $13.99B. This decline raises questions about the sustainability of the current rally. However, sentiment remains strongly positive, and Open Interest growth suggests that leverage is replacing spot activity in fueling price momentum. Additionally, Options Open Interest fell 8.40%, hinting that some traders are unwinding hedges in favor of directional exposure.

Can SOL extend gains past Fibonacci resistance?

Price now sits above the 0.382 Fibonacci level at $183.67. A clean break could pave the way to $206.43 and $229.18—the next Fib levels. If momentum holds, the full pattern extension points toward $302.85. On the other hand, failure to hold above $183 could force a retest of the $155 zone, invalidating the bullish setup. RSI stood at 54.94, indicating neutral momentum with room for expansion in either direction.

Conclusion

Solana is poised for a sustained breakout. The cup-and-handle pattern, surging OI, and rising Funding Rates all reinforce bullish continuation. Despite a drop in Spot Volume, sentiment remains strong, and short liquidations above $185 are fueling upward momentum. With price holding firmly above the 0.382 Fibonacci level, a rally toward $206 and $229 is now the most probable outcome. SOL’s structure and metrics confirm that the next leg up has already begun.

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2025-05-24 11:05