Why is Solana Price Down Today?

NOIDA (CoinChapter.com)—The price of Solana (SOL) recovered as trading entered the new week on Aug. 12, yet it has remained in the red over the last 24 hours due to the token’s 13.5% plunge over the weekend.

Furthermore, the SOL USD pair seems to have more bearish times ahead of it, thanks to bearish market sentiment and a technical setup.

Market Sentiment and Investor Positioning in Solana

Solana’s recent market activity reflects a notable shift in sentiment. Open interest in Solana futures has decreased significantly since early August, coinciding with a weakening price, suggesting a reduction in bullish momentum.

Traders appear to be pulling back, likely indicating a loss of confidence or profit-taking, which often precedes further declines.

Funding rates have also moved into negative territory multiple times, especially from late July through early August. The trend signifies an increasing dominance of short positions, with traders willing to pay a premium to maintain their bearish outlook.

Though the funding rate is currently going up, declining open interest might suggest that market participants are opening more short positions.

Additionally, on-chain data from Santiment reveals significant changes in the distribution of Bitcoin among whale and smaller holders, which may indirectly impact Solana. Large holders of 100,000 to 1 million BTC have shown a sharp decline in their percentage holdings, indicating substantial profit-taking or distribution.

Meanwhile, smaller holders (100-1,000 BTC and 1,000-10,000 BTC) have gradually increased their positions, suggesting a redistribution of Bitcoin from whales to smaller players. This shift may lead to reduced market stability and increased volatility, which can negatively affect correlated assets like Solana.

Taken together, these factors point to a growing bearish sentiment around Solana, with the potential for further downside if current trends persist.

SOL price Continues To Move Inside a Bearish Setup

Meanwhile, the SOL price avoided confirming a breakout below a bearish technical setup called the ‘descending triangle pattern.’

Market analysts often consider the descending triangle a bearish continuation signal.

The configuration features a downward-sloping upper trendline, which gradually reduces the price action’s highs, and a flat lower trendline, which is a consistent support level the price finds difficult to break.

Moreover, the pattern suggests that selling pressure is intensifying, leading to successively weaker rallies. In this setup, the potential price target is typically gauged by the maximum height of the triangle at its widest point.

Hence, SOL price is yet to confirm the breakout from the descending triangle pattern. However, confirming the bearish setup might result in the SOL price dropping nearly 50% to reach the projected price target near $75.