Solana, countdown to a surge?...Whale buying initiated with two consecutive days of ETF net inflows

▲ Solana (SOL)

Solana (SOL) extended its decline, falling below the $85 mark after last week's correction. However, with the inflow of institutional demand and improved derivatives indicators, it is igniting the spark for a rebound.

According to crypto media outlet Cointelegraph on May 20 (local time), Solana's price continued its bearish trend, trading below $85 on Wednesday. Despite the recent price correction, institutional demand appears to be stabilizing. According to SosoValue data, Solana spot ETFs recorded net inflows for two consecutive days this week, with $2.06 million on Monday and $3.78 million on Tuesday. This inflow trend has been consistent since early May, and if it continues through the rest of this week, it could drive Solana's price recovery.

Indicators in the derivatives market also support a moderate uptrend. According to CoinGlass data, Solana's funding rate turned positive on Tuesday and rose to 0.0063% on Wednesday, indicating that long positions are paying short positions. Historically, Solana's price has rallied when the funding rate turned positive from negative and then rose, so expectations for a rebound are high this time as well. Solana's long/short ratio also rebounded to 0.99 on Wednesday after hitting a one-month low on Sunday, getting close to positive territory. CryptoQuant's summary data also indicated a neutral to moderately positive sentiment as the overheating in the spot and futures markets cooled down, hinting at future recovery potential.

On the other hand, from a technical analysis perspective, selling pressure from sellers remains effective. As of Wednesday, Solana's price remained below the short-term and medium-term Exponential Moving Averages (EMAs), trading at $84.04. The Fibonacci 23.6% retracement level at $86.67 and the 50-day EMA at $87.64 form an immediate supply zone just above, strengthening the bearish bias as long as the price is trapped below this. The 100-day EMA at $92.96 and the horizontal resistance at $97.89 above it also establish a broader resistance zone. The Relative Strength Index hovering around 41 and the MACD histogram declining in negative territory also suggest a dominant downward momentum.

To the downside, initial support is a horizontal line near $77.71, and below that, a more distant structural bottom is a Fibonacci support near $67.50. As long as Solana remains below the resistance cluster between $86.67 and $87.64, selling pressure is likely to emerge with every attempt to rebound. A sustained break above the 100-day EMA at $92.96 would alleviate the current downward pressure, opening the way towards the $97.89 to $98.53 resistance zone. An FXStreet article assessed that while Solana is blocked by short-term resistance, institutional fund inflows are providing downside support.

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