Solana, at Risk of Breaking $70 Despite ETF Fund Inflows…Retail Investors Exit

▲ Solana (SOL)/AI generated image ©

Solana (SOL) is at risk of falling below $70, losing its upward momentum due to decreasing futures trading volume and a negative shift in funding rates, despite steady inflows of institutional funds.

According to investment media FXStreet on August 3 (local time), Solana showed a decline on Monday, remaining below its 50-day Exponential Moving Average (EMA) of $75.68. In July, Solana Exchange Traded Funds (ETFs) saw a net inflow of $14.62 million, but as short-term demand from retail investors weakened, the technical outlook tilted towards a moderate bearish trend.

According to Coinglass, SOL futures trading volume decreased by 14% in the last 24 hours, reaching $3.66 billion. The funding rate also shifted from a high of 0.0062% on Sunday to minus 0.0011%. This suggests a decrease in speculative trading demand and the beginning of bearish bets gaining dominance in the derivatives market.

On the other hand, institutional demand remained relatively robust. According to SoSoValue, Solana ETFs saw an inflow of $2.82 million last week, extending its net inflows for five consecutive weeks, bringing the cumulative inflow for July to $14.62 million. However, this was the smallest amount among months that recorded net inflows. Compared to the net outflow of $786,580 in May, this could be an early sign of recovering institutional demand.

Technically, SOL is trading below the 50-day line at $75.68 and the downtrend line at $76.06, heading towards the support trend line at $71.30. If the daily candle closes below this range, the decline could extend to $66.81, which is the 78.6% Fibonacci retracement level of the drop from $98.41 to $60.13. The Relative Strength Index (RSI) recorded 43, below the neutral line, and the Moving Average Convergence Divergence (MACD) also remained negative below its signal line, indicating strong downward pressure.

For a rebound, SOL must first break through the resistance zone between $75.68 and $76.06. After that, the 50% Fibonacci retracement level of $79.27 will be a key resistance, and further upside will likely be capped by $87.60 and the 200-day line at $92.69, respectively. If demand from retail investors and the derivatives market does not recover despite ETF fund inflows, the risk of breaking $70 in the short term could increase further.

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