Solana, Net outflow from exchanges surges 356%...Is a 21% crash coming?

▲ Solana (SOL)

Solana (SOL) faces a 21% decline risk due to a double-top pattern, but large outflows from exchanges and on-chain buying zones are creating a structure that defends against downward pressure. While price charts show bearish signals, net outflows from exchanges and holder cost basis distribution suggest that a short-term collapse is not easily achievable.

BeInCrypto reported on May 14 (local time) that Solana is trading at $91.22, and if the $76.66 neckline is clearly broken, a 21% decline could open up according to the double-top pattern. However, it stated that net outflows from exchanges have surged by 356% since May 2, and a large cost basis zone has formed between $85 and $89, indicating a direct confrontation between selling pressure and buying defense lines.

On Solana's daily chart, two peaks were formed at $97.66 in late March and $98.35 on May 12. Between these two peaks, the price remained in a narrow range, and buying volume significantly slowed down. BeInCrypto explained that this trend is typical when a top pattern forms amid weakening buying conviction.

For the bearish scenario to materialize, the $76.66 neckline must first be broken. However, between the current price and the neckline, there are multiple strong cost basis defense lines. According to Glassnode's cost basis distribution data, the largest buying zone is between $85.66 and $86.22, where 13,734,525 SOL were purchased. Additionally, 8,804,899 SOL are accumulated in the $88.49-$89.07 zone, which could act as the first line of defense.

Exchange flows also show different signals compared to the bearish chart. In April, Solana exchange inflows were dominant, but after May 2, the net position change rapidly turned negative. On May 2, Solana's net outflow from exchanges was 501,807 SOL, but by May 13, it expanded to a net outflow of 2,286,298 SOL. This represents a 356% increase in net exchange outflows in just two weeks.

Such a large net outflow is interpreted as an accumulation signal. When holders withdraw Solana from exchanges to self-custody, potential selling volume decreases, which can slow down the pace at which technical bearish patterns lead to an actual breakdown. Especially since the net outflow coincided with the rally towards the second peak around $98, it can be interpreted that buyers stepped up to defend the price even while the bearish pattern was forming.

Currently, Solana is trading above the 20-day Exponential Moving Average (EMA) of $89.54 and the 50-day EMA of $88.13. These two EMAs overlap with the $88.49-$89.07 cost basis zone and act as the primary short-term support. If the daily candle closes below the 50-day EMA, the Fibonacci 0.618 level of $84.96 would be exposed. This level, coupled with the largest cost basis zone of $85.66-$86.22, is presented as the last key defense line before the neckline.

If even this zone is broken, Solana could sequentially test the Fibonacci 0.786 retracement level of $81.31 and the $76.66 neckline. If the neckline breaks, the next downside target is presented as $63.25, with a deeper bottom at $60.23. Conversely, to weaken the bearish outlook, Solana needs to recover $93.25 and close a daily candle above $98.37 to invalidate the double-top pattern. The Solana market has now entered a zone where its direction will be determined by the defense of the support level around $88.13 and whether it can recover $93.25.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*