Since reaching its all-time high of $264.63 on November 24, Solana (SOL) has faced increased selling pressure. Currently trading at $232.72 at the time of writing, the coin’s value has dropped 12%.
With bullish sentiment waning in the broader crypto market, this downtrend has fueled a surge in short positions, as traders bet on a further decline in SOL price.
Solana price tumbles as futures traders bet against a rally
According to Coinglass, within the past 24 hours, the total value of Solana short positions reached $6 billion, far exceeding long positions at $5.38 billion. This shows a significant bearish sentiment on the part of traders.
As of now, SOL’s long/short ratio stands at 0.96. The long/short ratio of an asset measures the proportion of long positions (bets on price increases) to short positions (bets on price decline) in a given market.
When the ratio is below 1, it indicates that there are more short positions than long positions, suggesting that the majority of traders are betting on a price decline rather than expecting a price increase.
Additionally, SOL’s negative weighted sentiment confirms the bearish bias. As of the time of writing, this number is -0.40.
An asset’s weighted sentiment index tracks the overall market mood associated with it. When the value of this index is negative, most discussions on social networks are driven by negative emotions. This suggests that market participants expected prices to fall and have gradually reduced trading activity to avoid a fall.
SOL price forecast: 20-day EMA is key
On the daily chart, SOL price is likely to break below the 20-day exponential moving average (EMA). This indicator tracks the average price of an asset over 20 days, giving priority to more recent values.
From October 11 until now, it has continuously acted as a dynamic support level for SOL. Currently, the 20-day EMA offers support at $226.52, and a decisive break below this level would confirm a shift to the downside. If this happens, SOL price could drop to $205.56.
On the other hand, if market sentiment becomes more optimistic, SOL price could recover and move towards its all-time high of $264.63.