Sol faces a potential dip below $120 as ETF inflows and market sentiment wane.

Key Takeaways

• Solana has dropped 10% in the last 24 hours and is now trading below $140.
• The cryptocurrency may continue to decline as market sentiment weakens.

Market Sentiment Weakens as Cryptocurrencies Suffer Significant Losses

SOL, the sixth-largest cryptocurrency by market capitalization, has seen a 13% decline in value this week, marking three consecutive weeks of losses. This downturn comes amidst historically low inflows for Solana Exchange-Traded Funds (ETFs) in the United States, suggesting decreased institutional demand. According to Sosovalue, U.S. Solana spot ETFs recorded a net inflow of just $1.49 million on Thursday, primarily due to the Bitwise Solana Staking ETF. This represents the lowest inflow since the launch of Solana ETFs and indicates a drop in interest from institutional investors.

Additionally, CoinGlass data shows that SOL’s Open Interest (OI) in futures contracts has decreased by 3.34% in the last 24 hours, dropping to $7.35 billion. This points to traders either closing long positions or reducing their leverage. In line with current market conditions, the funding rate weighted by OI has turned negative at -0.0076%, a shift from near-neutral levels earlier in the day, suggesting that more traders are holding short positions. If the current market environment remains unchanged, a recovery may prove challenging for bullish investors.

Could Solana Extend Declines to $120?

The daily SOL/USD chart remains bearish as Solana has underperformed in recent days. The cryptocurrency is slightly down for the fourth consecutive day this week, having fallen below the psychological level of $150 just hours ago.

At the time of writing, SOL is trading at $138 and aims to test the low of $126 from June 22. Should SOL break below this low, it could test the psychological support level of $100 in the upcoming days or weeks.

The Relative Strength Index (RSI) is plunging to 36 on the same chart, approaching oversold territory and indicating selling pressure. The Moving Average Convergence Divergence (MACD) has also failed to surpass the signal line, extending the downtrend.

However, if technical indicators improve and SOL maintains its value above $126, it may see a slight rebound towards the supply zone around $155. The next resistance level at $175 could prove challenging in the short term.