Solana Price Faces Potential Extended Correction as Market Sentiment Shifts

Solana Rally Loses Momentum After Strong Monthly Performance

Solana's impressive rally appears to be cooling down despite achieving over 22% gains in the past month. The cryptocurrency has experienced a sluggish week, dropping nearly 6% to trade around the $184 mark, significantly below its recent highs.

While this decline might appear to be a healthy market correction, several on-chain metrics and sentiment indicators suggest the pullback could extend longer than many investors anticipate.

SOPR Metrics Signal Weakening Market Confidence

The Spent Output Profit Ratio (SOPR) provides crucial insights into market behavior by tracking whether token holders are selling at profit or loss. Solana's SOPR has declined from 1.04 to nearly 1.00 over the past week, indicating that sellers are barely breaking even on their positions.

This metric shift reveals that fewer investors are realizing profits, typically occurring when market confidence begins to wane. The combination of falling SOPR alongside declining prices often signals market hesitation or early panic selling behavior.

Liquidation Data Reveals Bearish Trader Positioning

Supporting the bearish sentiment, liquidation data shows significant short positioning in Solana markets. Over the past seven days, short positions totaled $1.28 billion compared to $924 million in long positions.

This substantial short bias aligns with the SOPR reset and demonstrates that traders are increasingly betting on further price declines rather than positioning for upside potential in the near term.

Bull-Bear Power Index Shows Declining Buyer Strength

The Bull-Bear Power Index, which measures the relative strength between buyers and sellers, has been trending downward. This indicator reveals that buyers are gradually losing control as the correction deepens.

Fading bull power suggests fewer aggressive purchases during price dips, reducing the likelihood of a quick market recovery. This cooling effect doesn't necessarily indicate a broken long-term trend but suggests bulls are taking a temporary pause.

Without fresh buying interest, Solana's price may remain under pressure or continue grinding lower before any meaningful recovery materializes.

Critical Technical Levels Define Solana's Price Outlook

From a technical analysis perspective, Solana has retreated from its local peak at $206 and currently hovers around $184. Using Fibonacci retracement analysis from the recent $125 low to the $206 high, the key support level to monitor is $175.

This level represents a classic 38.2% retracement zone, commonly viewed as the first significant support in healthy uptrends. How Solana performs at this level will likely determine its short-term price direction.

Key Price Scenarios and Market Implications

If Solana successfully holds the $175 support level, the cryptocurrency may enter a consolidation phase before attempting another upward move. However, a break above $187, which serves as key resistance where prices have previously been rejected, could quickly shift the short-term bearish narrative to bullish.

Conversely, if the $175 support fails, it could trigger a deeper correction. Such a breakdown would confirm the bearish signals emerging from SOPR data, liquidation patterns, and weakening bull power metrics.

Market Outlook and Trading Considerations

The current technical and fundamental indicators suggest caution for Solana investors and traders. While the long-term bullish trend may remain intact, short-term weakness appears likely to persist without significant buying pressure.

Traders should closely monitor the $175 support level as a make-or-break point for Solana's near-term price action. The convergence of bearish on-chain metrics with technical resistance levels creates a challenging environment for immediate price recovery.

Market participants should conduct thorough research and consider risk management strategies when making investment decisions in the current market environment.

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