Key Takeaways
- Solana triggered a breakout from its July compression channel. However, the increased hedging suggested the breakout didn’t convince some players. What’s next for SOL prices?
Solana [SOL] price has broken out from its July compression ahead of the Federal Market Open Committee (FOMC) minutes.
While this could be a set-up for an extended 5% surge to $160, there was a considerable hedging (bearish bets) on the Options market.
Source: SOL/USDT, TradingView
SOL traders remain cautious
In most cases, the FOMC Minutes act as a volatility driver, as traders use them to gauge the Fed’s sentiment and outlook on interest rate cuts.
In fact, between 7-9 July, the sentiment across Options Volume jumped from a bullish Put/Call (P/C) ratio of 0.35 to a bearish rating of 1.19, a press time.
This meant a premium for puts (bearish bets) over calls (bullish bets). Put differently, traders were positioning for a potential pullback should the FOMC Minutes turn hawkish.
Source: Laevitas
Could a spike in bearish bets stall the mid-week and July breakout? At the time of writing, the derivative market has remained flat, with Open Interest (OI) stuck around $7.1 billion.
This meant speculative interest remained stagnant in July, compared to the recovery from $4 billion to over $7 billion in Q2. Unless the OI expands, SOL’s breakout could be fake.
Meanwhile, there was no strong bidding from the spot market side. Per Coinalyze data, the spot CVD (Cumulative Volume Delta), which tracks the overall demand and selling, has declined in early July.
Source: Coinalyze
Still, the OI jumped 11% over the same period, suggesting that the July price action and recent breakout were purely driven by speculation and leverage. With no spot demand, the rally could be short-lived or retraced.
In the mid-term, SOL ETF speculation could set the direction for Q3. However, for this week, SOL could be driven by liquidation hunts.
If that’s the case, SOL could tag $154.6 or stretch to $158 before hunting for the leveraged longs at $145.
There was nearly $600 million in cumulative longs at $145, making it a potential price magnet.
Source: CoinGlass
That said, the Q2 rebound showed a bullish structure after defending the realized price (average cost basis of most SOL holders).
Any sustained drop below the realized price (currently at $131) would invalidate the bullish market structure.
Source: Glassnode
