Solana (SOL) price reclaimed the $160 level on Monday, June 9, up 6% over the weekend; SOL’s open interest trends suggest a major breakout phase ahead.
Solana price Rebounds 6% at the Weekend
The crypto market suffered intense downward volatility on Friday June 7 as investors reacted to the latest US Non-Farm Payrolls (NFP) jobs data.
Solana emerged as one of the worst-hit assets in the top 10 crypto rankings, having struggled to attract fresh demand since the last week of May 2024 as the Ethereum ETF approval saw investors overlook rival Proof-of-Stake networks.
In the aftermath of the NFP data, SOL price quickly succumbed to a 12.6% correction on June 7, as it tumbled to a 20-day low of $153, according to data obtained from TradingView.
However, Solana price experience a sizeable 6% rebound to reclaim the $160 level in the early hours of June 10, erasing nearly half of the losses recorded during the market crash on Friday.
It appears there has been a significant increase in demand within the Solana markets over the weekend as bulls swooped in to avert further losses.
Solana Open Interest Holds $2 Billion Despite Price Dip
Solana’s price dip in late May after the ETH ETF approval attracted the attention of eagle-eyed bull traders looking to buy in at a local bottom. The market crash on June 7 came prematurely for this group of new entrants, who have then been forced to defend their positions to avert early losses.
Solana’s Open Interest trends show how investors had mounted a new position as May 2024 drew to a close.
The chart above shows how bulls have swung straight into action in early June, send the SOL futures open interest to a 20-day peak of $2.58 billion as of June 5. Interestingly, while SOL price has now declined 9% from the $171 weekly-top on June 5, the open interest has held up steady.
At the time of writing on June 10, Solana Open Interest it trending at $2.36 billion. This $220 million decline in Solana open interest between June 5 and June 10, reflects a 9% drop-off in capital stock.
At first glance, this appears overwhelmingly bearish. However, when compared to the SOL price downtrend within the same time frame, it signals resilience and optimistic conviction among short-term traders.
During a market crash, if an asset’s open interest declines at a slower pace than its price downtrend, it signals bullish rebound momentum for two main reasons:
Widespread expectation of early rebound: When an assent’s Open interest holds up steadier than its price, it implies traders are holding onto their long positions during the downturn and are not liquidating en masse. This often cushions the asset from a steeper decline and sets the stage for a potential rebound.
Reduced Panic Selling: The measured decrease in Solana open interest may suggest that fewer traders are panicking and selling off their positions. This can help stabilize the market quicker and lead to a more sustainable recovery once the initial panic subsides.
Solana Price Forecast: Will $160 Resistance Cave in?
Solana price has surged 6% over the weekend with bull traders holding on their LONG positions, keeping SOL open interest holding up above the $2 billion mark. This market allignment, suggests a rapid price breakout above $180 could be on the cards in the week ahead.
However, in terms of short-term resistance, Solana faces a potential roadblock around the 10-day SMA price level at $165.
If the bulls can stage a decisive Solana price breakout above the key resistance level, they could advance toward $180 as predicted.
But conversely, if the bears regain a foothold in the market, Solana’s price could suffer a major pullback from the $165 sell-wall. However, in this scenario, bulls could mount short-term support around the $157 level.
In essence, Solana traders can anticipate a prolonged consolidation with a narrow channel of $155 – $170 within the current market dynamics.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
