- SOL registered a slightly negative funding rate, hinting at early short correction
- Despite some bearish signs, altcoin’s long-term structure has remained bullish
At the time of writing, Solana (SOL) was the only top 10 cryptocurrency (Excluding stablecoins) with a negative funding rate. Its reading of -0.0002% seemed tiny, but it may be an early indication that pressure is building on the short side of the market.
Funding levels usually gauge the funding sentiments across derivatives markets. A negative funding level means short sellers are financing longs – Usually a mild bearish tilt.
In Solana’s case, even though the drop has been shallow, it is still significant compared to the larger market. Especially since most assets have been noting positive or neutral funding rates lately.
Source: Glassnode
Active addresses represent long-term resiliency
Unlike the funding rate, on-chain activity appeared to be more favorable though. Long-term active addresses, for instance, have continued to grow – A sign of persistent confidence in the network from committed users and investors.
Such a trend is likely to mean a healthy system, one that can support price hikes in the long run. Such a trend also implies that the broader user base remains active, despite some traders hedging short.
Source: Token Terminal
$175 supply zone still holds for SOL
Technically, Solana’s price has been consolidating in the zone around the $175-level for the past fortnight. This zone has been a key supply zone where bears executed several sell orders, with the trading volume climbing too.
So far, SOL has retested the region in a choppy structure without a successful breakout. The prolonged consolidation, which has been on hold since 9 May, suggested that bulls and bears have been waiting for more aggressive signals to commit to either direction.
Source: TradingView
Bullish market structure still intact
Despite the fading funding rate and resistance at $175, Solana’s overall market structure has been bullish. In fact, SOL’s price action on longer timeframes hinted that the bulls remain firmly in charge.
A hike in activity from long-term investors only served to affirm this point of view.
While caution must be exercised based on short-term measures, the overall picture for SOL remains biased towards potential gains.
