Solana (SOL) Plunges 4%... $1.4 Billion in Long Liquidations Pour Out, Putting $107 Support Line 'at Risk'

▲ Solana (SOL) ©

Solana (SOL) fell by more than 4% in a single day, giving up the $110 mark. It is analyzed that excessive long position liquidations accumulated in the derivatives market, rather than changes in long-term fundamentals, amplified selling pressure, and in the short term, whether the $106.95 support holds has emerged as a watershed for further declines.

According to CoinMarketCap, a cryptocurrency market aggregation site, on September 20 (local time), Solana recorded a 4.01% drop to $108.79 over the past 24 hours. This drop was larger than Bitcoin's (BTC) 0.94% decline during the same period. The most direct factor contributing to the decline was identified as the liquidation imbalance in the derivatives market. Analysis on September 19 showed that while long position liquidations amounted to approximately $1.4 billion, short position liquidations were only $103 million, indicating that a structure was formed where leveraged long positions could be concentratedly unwound during the price decline.

Profit-taking following a 22% rise over the past month and the possibility of slowing spot demand also acted as burdens. While ecosystem-related indicators, such as inflows into Solana spot ETFs, maintained a positive trend, analysis suggested that these funds were not directly translating into buying pressure in the circulating market. This explained the discrepancy between the positive on-chain and ecosystem trends and actual price movements. To confirm a recovery in buying interest, it is crucial whether the recently broken $110-$112 range is reclaimed.

Technically, a short-term bearish trend is evident. SOL is currently trading below its key 7-day and 30-day moving averages, with $106.95 presented as a critical Fibonacci support level. If this price level is defended, there is a possibility of sideways movement and stabilization between $107 and $111, but if it falls below $106.95, additional selling pressure could increase, leading to a correction towards the $103 mark.

The overall market direction is also a variable. Bitcoin's weekly close on September 20 was identified as a key event that would influence short-term cryptocurrency investor sentiment. Specifically, if BTC fails to hold $80,000, further downward pressure could be exerted on altcoins, including Solana, which are more volatile than the market. In the derivatives market, the stabilization of open interest and funding rates was presented as an indicator to confirm whether forced liquidation pressure has subsided.

CoinMarketCap assessed that SOL is currently under bearish pressure in a correction phase after a strong rally. In the short term, as the unwinding of excessively accumulated leveraged long positions amplified the decline, the defense of $106.95, the recovery of $110-$112, and Bitcoin's support at $80,000 were identified as key variables that will determine future trends.

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