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Key Takeaways:
- SOL breakout faces headwinds as bearish bets increase in the options market.
- Leverage-driven rally raises concerns amid weak spot demand and stagnant Open Interest.
- $145 liquidation zone and $131 realized price are critical support levels to watch.
Solana (SOL) has broken out of its July price compression, reaching above $150 ahead of the highly anticipated Federal Open Market Committee (FOMC) minutes. While some analysts predict a 5% push toward $160, the derivatives market tells a more cautious story.
Bearish Sentiment Grows in Options Market
From July 7 to 9, Solana’s Put/Call ratio jumped from a bullish 0.35 to a bearish 1.19, indicating a shift in sentiment. This uptick in put options suggests that traders are hedging against potential downside — possibly anticipating hawkish cues in the FOMC minutes.
The rise in puts relative to calls typically reflects expectations of increased volatility or downside pressure. The cautious stance may be warranted given the historical impact of FOMC disclosures on crypto markets.
Derivatives-Driven Rally Raises Red Flags
Despite the breakout, Solana’s Open Interest (OI) has remained stagnant near $7.1 billion, showing no significant surge in speculative demand. Compared to the robust recovery in Q2 — when OI grew from $4 billion to over $7 billion — the July activity appears muted.
Even more concerning is the spot market’s lack of participation. According to Coinalyze, the Cumulative Volume Delta (CVD) for SOL has been on a downtrend in July, suggesting weak actual demand. This indicates that the breakout may be driven primarily by leverage rather than strong buying interest, raising the risk of a short-term retracement.
Also Read: Bonk.fun Flips Pump.fun: $500K Daily BONK Burns Fuel Solana Meme Coin Surge
Will Liquidation Hunts Dictate This Week’s Price Action?
With spot buyers largely on the sidelines and options traders hedging aggressively, Solana’s next move could be driven by liquidation hunts. Analysts are eyeing $154.6 and $158 as potential resistance levels. However, a pullback to $145 — where nearly $600 million in leveraged longs are positioned — is possible if market makers seek to flush out excessive long positions.
Despite these short-term risks, Solana maintains a bullish mid-term structure as long as it holds above its realized price of $131. Any drop below this key support could invalidate the bullish thesis and shift momentum in favor of bears.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
