Solana (SOL) experienced a surge in long liquidations on December 10th, totaling $57 million, as the cryptocurrency market faced bearish sentiment. This resulted in the highest level of SOL long liquidations in over five months, indicating increased selling activity.
Within 24 hours, the price of Solana fell by 5.39% to approximately $217, and its market capitalization briefly dropped below $100 billion for the first time in three weeks. Traders holding leveraged positions are concerned about the heightened volatility in the market. The recent spike in liquidations is attributed to a bearish trend in the cryptocurrency landscape, which led to the closure of long positions and subsequent selling pressure on Solana's price. Analysts note that while this may have reduced overleverage in the market, it also poses the risk of further declines if the price fails to stabilize. The presence of additional liquidation clusters below the current price level suggests a significant potential for further downturns.
Technical analysis of Solana's price action reveals a rounded top pattern on its four-hour chart, indicating a bearish continuation. The critical support level for this pattern is at $215, which SOL has tested multiple times. A break below this level could trigger a more pronounced downtrend, with potential targets set between $200 and $183. The Relative Strength Index (RSI) currently sits at 30, indicating that SOL is nearing oversold territory. While this could lead to short-term gains, a sustained recovery will depend on the RSI crossing above its signal line. The Awesome Oscillator (AO) has displayed red histogram bars, further reinforcing the bearish outlook for Solana. Traders are advised to closely monitor the price, particularly for any movements below the neckline of the rounded top pattern. A breach of this support level could accelerate selling pressure and lead to additional long liquidations, worsening the current market conditions.
The prevailing market sentiment surrounding Solana remains cautious, with traders on high alert for further declines. The liquidation map from Coinglass indicates that the long liquidation leverage for SOL is significantly high below the $200 mark. If the price falls below this threshold, it could trigger a wave of forced liquidations, adding to the downward pressure on the asset. Buyers are concerned about potential losses if the bearish trend continues. The combination of technical indicators and market sentiment suggests that without a shift in buyer behavior, SOL may struggle to recover. Traders are advised to remain vigilant as they assess their positions in light of the current market dynamics.