Bearish Crossovers Confirm Solana ‘s Technical Weakness
The breakdown of the ascending wedge pattern by Solana has marked the beginning of a structural correction phase. This technical configuration is generally considered a reversal signal. It now comes with two exponential moving average (EMA) crossovers that are closely watched by traders.
The first involves the 50-day EMA that is about to cross below the 100-day EMA. Additionally, the second sees the 20-day EMA dangerously approaching the 200-day EMA. These crossovers are called “death crosses” in technical terminology. They traditionally signal sellers taking control and often precede a new leg down before stabilization.
These configurations reinforce the bearish short-term structure and justify caution among traders. Historically, such signals have led to additional declines of 10 to 15% before a new sustainable support forms. However, technical analysis only tells part of the story.
Derivatives Reveal Massive Imbalance Favoring Short Positions
Data from derivatives platforms provides crucial insight into the current dynamics of SOL’s price. Bybit’s 30-day figures show a striking contrast: only $103.9 million in long positions remain versus $1.45 billion in open short positions.
This colossal imbalance reveals that the recent correction primarily results from a cascade liquidation of leveraged long positions, rather than massive selling initiated by long-term holders. The purge of long positions is now practically complete, which mechanically reduces the potential for additional downside caused by forced liquidations.
Paradoxically, this situation creates conditions for a potential short squeeze. With such an asymmetric perpetual market favoring shorts, even a modest bounce could trigger a wave of short position liquidations. This causes a rapid technical rally. The $180 and $191 levels concentrate significant accumulations of shorts that could fuel such a movement.
Holders Aren’t Selling En Masse, Signaling Resilience
On-chain analysis via the net position change of holders brings a reassuring perspective. Between October 7 and November 3, net outflows from long-term wallets decreased from -10.52 million SOL to just -1.37 million SOL, representing an 87% reduction in outflows.
This stabilization in long-term holder behavior sharply contrasts with the frenzied activity observed in derivatives markets. It suggests maintained conviction among core investors, who aren’t capitulating despite the correction. This resilience typically constitutes a precursor signal for market bottom formation.
The current $166 level represents an immediate support zone, just above the critical $163 area. If the latter gives way, $155 becomes the make-or-break level for Solana. A successful defense of this threshold, combined with the low number of remaining long positions, could mark the bottom of this correction. Conversely, a clean break below $155 would invalidate the stabilization scenario and pave the way for new lows.
To the upside, breaking above $191 could catalyze a cascade liquidation of shorts toward $200, or even $222 (Fibonacci level 0.786). The path of least resistance remains bearish in the short term. However, positioning fundamentals suggest that a rebound could occur sooner than anticipated by consensus.
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