Solana OI Spikes, Funding Rate Struggles; what about sol price?

Solana price action was largely battered after the collapse of FTX, which resulted in a price drop of over 60% in just ten days. While SOL price managed to post some minor gains in the past week, the larger market blues still plagued it.

On November 24, a flurry of fresh gains lifted the price of SOL by more than 20% from multi-month lows of around $10. After missing the $30 level, Solana price has declined directly from $20 to around $14 at press time.

While spot market price action has been largely dependent on bitcoin, Solana has made some progress in the futures market.

Solana Open Interest Pump

The values ​​of open interest and funding rates help to understand where the market is headed and whether the price action may change. Open interest for Solana saw an increase of over 7% in tandem with the largely bearish price action. As of press time SOL open interest stood at $251.5 million.

Solana Open Interest |  Source: Coinage
Solana Open Interest | Source: Coinage

With the Open Interest rising and the price action still being largely bearish, this may indicate further opening of short positions in the market. The funding rate was still negative, which meant that traders with short positions were dominant and were willing to pay long traders. This is typical of a bearish trend.

Solana funding rate |  Source: Coinage
Solana funding rate | Source: Coinage

The overall outlook suggested a prolonged recovery as the bears dominated the bulls. However, with the bearish trend already waning, a recent relief rally was not surprising.

SOL growth on point, but traction remains low

Despite the large bearish price structure, SOL still had dazzling growth activity. Growth activity appreciated throughout November, while the metric of growth activity contributors remained above average.

Solana Development Activity and Development Activity Contributors |  Source: Sanbase
Solana Development Activity and Development Activity Contributors | Source: Sanbase

However, Solana’s social volumes still haven’t shown any major social media activity around the property. Overall weighted sentiment for SOL was still negative, while social dominance was also affected.

Social Metrics Solana (SOL) |  Source: Sanbase
Social Metrics Solana (SOL) | Source: Sanbase

That said, the massive increase in volatility helps explain the recent 20% gain.

Solana Volatility |  Source: Messari
Solana Volatility | Source: Messari

Volatility is at a six-month high, causing significant volatility. However, with volatility peaking, SOL traders can expect similar moves in either direction in the near-term.

For SOL price, the psychological resistance at $20 could play a crucial role in confirming the recovery. If the bearish price action pans out, the price could potentially test the $8 level as support.


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