Glassnode's on-chain data reveals a concerning situation for Solana: the network is experiencing unprecedented liquidity crunch with consistent losses outweighing profits since mid-November. Amid massive outflows from exchanges and extreme volatility, SOL is navigating turbulent waters despite some structural support signals.
Despite this bearish pressure, Solana (SOL) paradoxically benefits from certain structural supports that could cushion the decline. The persistent withdrawals from centralized exchanges mechanically reduce the available supply on the market, creating an artificial scarcity likely to support the price in the medium term.
Spot Solana ETFs also display positive momentum with $17.72 million in net inflows this week, a figure close to the $20.30 million from the previous week according to SoSoValue. These institutional flows constitute a steady base of demand that contrasts sharply with the selling behavior of retail holders.
This dichotomy between incoming institutional flows and declining onchain liquidity illustrates a profound redistribution of the holder base. Weak hands are gradually exiting while institutional investors quietly accumulate via regulated vehicles.
Crypto analysts are adopting a nuanced stance toward this situation. While medium and long term outlooks remain moderately constructive, particularly if macroeconomic conditions improve and liquidity returns to markets, the short term remains perilous for SOL.
The toxic combination of degraded profitability, compressing liquidity, and elevated leverage exposes Solana to sharp movements in both directions. Leveraged traders are particularly at risk of suffering cascading liquidations if selling pressure intensifies.
Some analysts mention a potential recovery in early January, a period traditionally marked by a return of liquidity after the year-end holidays. This seasonality could offer a window for a technical bounce if macroeconomic fundamentals improve simultaneously. Nevertheless, no clear reversal signal is yet visible in current onchain data.
SOL nonetheless gained 3.2% in the latest session according to CoinGecko, demonstrating some resilience against the pressure. This relative performance may indicate a gradual stabilization of sentiment, even though the underlying trend remains fragile.
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