Solana (SOL) Skyrockets on Institutional Demand After $38 Million Short Position Liquidation

▲ Solana (SOL) ©

Solana (SOL), driven by a massive short squeeze (buying pressure occurring to liquidate or cover short-selling positions) and an explosive influx of institutional funds, is dominating the broader market rally and is on the verge of breaking the $120 mark.

According to cryptocurrency market data aggregator CoinMarketCap on September 19 (local time), Solana surged 11.05% over the past 24 hours to $112.64, nearly doubling Bitcoin's (BTC) gain of 5.92%. This surge was critically ignited by a large-scale forced liquidation of bearish betting positions in the derivatives market. Solana positions liquidated in 24 hours exceeded $38 million, with short-selling positions accounting for a staggering 96% of this total, causing forced buying to instantly drive up the price.

The genuine recovery in demand from institutional investors also provided strong upward momentum. A net inflow of $159 million into US Bitcoin spot ETFs on September 18 spread risk-on sentiment across the broader cryptocurrency market, which quickly spilled over to Solana, a representative high-beta asset. In particular, the trading volume of Bitwise's Solana staking exchange-traded fund, BSOL, surged to approximately $85 million, substantially supporting spot buying pressure.

Improved fundamentals and technological advancements in the on-chain ecosystem are also key pillars supporting the rally. The Solana Foundation announced Project Harmonia, which connects its ecosystem with Allfunds, a traditional financial institution network, and the scale of real-world assets (RWA) within the network has surpassed $4 billion. Simultaneously, the Layer 1 sector as a whole rose by 6.09%, ranking second in trend themes, indicating that the rotation of funds into altcoins has fully commenced.

However, the possibility of a technical correction due to short-term overheating should be watched. As of the 14th, the Relative Strength Index (RSI) surged to 76.63, entering the overbought zone. In the short term, if the support level of $108 to $110 (23.6% Fibonacci retracement) is defended, further upside to $122 via $117 (127.2% Fibonacci extension) could be targeted. However, if Bitcoin fails to settle at $80,000 or profit-taking causes the $100 mark to break, there is also a risk of entering a deep correction phase.

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