The price of Solana has gradually increased over the past few weeks, rising from a low of $127 in June to over $200 at the time of this report. This upward trend has been fueled by the introduction of new projects on the blockchain, such as USELESS, which has helped push Solana (SOL) closer to the significant $200 mark. However, concerns persist regarding the sustainability of this rally and the potential for a bearish reversal.
Despite the current bullish sentiment surrounding Solana, a cryptocurrency analyst has raised warnings about the increasing bearish pressure on the asset. The analyst suggests that the recent surge above $190 may have been a classic fakeout, as the price had initially broken through a resistance level at $170, paving the way for the rise to $200. This situation has allowed for a liquidity sweep at elevated price levels, but a potential obstacle now looms for the altcoin that could trigger a decline.
The analysis indicates that, although Solana has experienced a rally, it remains within an ascending channel, suggesting that the prior breakout was unsuccessful. This failure indicates a lack of sufficient strength to maintain the price, making it susceptible to bearish influences. The analyst outlined two potential bearish scenarios. The first involves a direct drop to the maximum pain level (MPL) around $162.30, which would become a critical downside target. However, given the price's recent rise above $190, this scenario seems less probable.
The second, and more likely, scenario involves a temporary rise to retest previous highs before experiencing a decline. Alternatively, the price could form a lower high prior to dropping, leading to a significant decline. Ultimately, both scenarios point to a potential price drop toward the MPL level.
The recent price increase has sparked a surge in interest in Solana, with the open interest for the cryptocurrency reaching unprecedented levels. Open interest refers to the total number of open short and long positions for an asset, and data from Coinglass indicates that Solana's open interest has surpassed $10.96 billion, breaking its prior record of $8.79 billion. Interestingly, the current price of Solana remains significantly lower than it was during the last peak in open interest, suggesting there may still be momentum before the price begins to level off.
