Solana ($SOL) is trading above the $160 mark, showing resilience after a 4% gain on Wednesday, fueled by a broader market recovery. This upturn is supported by resurfacing retail and steady institutional demand, which suggests the recovery could extend. However, a noticeable drop in stablecoin liquidity on the Solana network introduces a potential risk to sustained on-chain activity.
Retail and Institutional Demand Returns
The market data points to a positive shift in investor sentiment toward Solana:
- Futures Market Flips Bullish: The Open Interest (OI) for SOL futures increased by 2.73% to $7.64 billion, indicating rising leveraged positions. Crucially, the OI-weighted funding rate flipped positive to 0.0066%, confirming growing bullish intent among derivatives traders.
- Short Squeeze: Overleveraged bearish positions were wiped out, with $7.19 million in short liquidations significantly surpassing $4.73 million in long liquidations. This dynamic increases the long-to-short ratio to near parity, suggesting the pressure from shorts is easing.
- Steady Institutional Interest: Institutional demand remains consistent, as shown by US spot SOL Exchange Traded Funds (ETFs) recording $9.70 million in net inflows on Wednesday.
If this dual demand from retail and institutions continues, Solana is well-positioned to extend its recent recovery.
Liquidity Concern: A Potential Trap
Despite the positive demand signals, network liquidity shows signs of stress:
- TVL Fluctuation: The Total Value Locked (TVL) on Solana saw a slight 2.27% increase to $10.215 billion after dipping below $10 billion earlier in the week. However, the overall TVL trend remains a steady downtrend, indicating a consistent outflow of digital assets and potentially waning user demand.
- Stablecoin Liquidity Declines: The most concerning factor is the stablecoin market capitalization on Solana, which has decreased by 8.16% over the past week to $13.816 billion. This decline in stablecoin liquidity could directly reduce the on-chain demand for SOL, negatively impacting its price if the trend persists.
Technical Outlook: Holding Support is Key
Solana experienced a sharp drop earlier in the week, falling from the 200-day Exponential Moving Average (EMA) at $186 down to the $155 support level.
- Current Support: SOL is currently stabilizing above the $155 demand zone. If the recovery holds and extends, the next target is the $174–$177 zone, which now acts as supply/resistance.
- Bearish Indicators:The daily chart still suggests intense selling pressure:
- The Relative Strength Index (RSI) at 34 is lingering near the oversold zone.
- The Moving Average Convergence Divergence (MACD) maintains a downward trajectory, indicating high bearish momentum is still present.
In conclusion, while short-term demand metrics are positive, allowing SOL to stabilize above $155, the persistent bearish technical signals and the crucial decline in stablecoin liquidity pose significant headwinds that could limit the recovery.
November 2025, Cryptoniteuae
