Solana (SOL) Dives 9.5% Amid Long Squeeze as Technical Indicators Signal Overcorrection

Key Points:

SOL dropped 9.5% Wednesday, hitting a near two-month intraday low.
$30 million in long liquidations occurred as open interest reached an all-time high.
Bearish technical divergence and elevated funding rates preceded the selloff.
$180 emerges as critical support amid a confirmed BOS and golden cross.

Solana (SOL) experienced a sharp 9.5% sell-off on Wednesday, retracing from an all-time high of $205 to $186 during the pullback. The correction arrived at a crucial support level near $180, where SOL previously formed a bullish structure break (BOS) three weeks ago, signaling the start of a new multi-month upside trend in early charts.

The precipitous drop was triggered by forced liquidations stemming from the long squeeze observed in SOL’s futures market. A record $30 million worth of long positions were unwound as open interest surged past the $12 billion mark, spotlighting an overcrowded long trade that reached its breaking point at the recent resistance zone near $200.

SOL one-day chart showing bearish engulfing pattern — SOL one-day chart. Source: Cointelegraph/TradingView

Key on-chain analysis highlighted this sell-off: net taker volume swung sharply negative, indicating intensified selling pressure; simultaneously, aggregated spot cumulative volume delta (CVD) continued declining, even as prices ascended, generating a bearish divergence. This divergence, combined with funding rates that reached five-month highs, created ideal conditions for a forced unwinding.

Technical chart showing price, CVD and funding rates — SOL price, aggregated futures, spot CVD and funding rate. Source: Coinalyze

Despite the volatility, strong technical tailwinds persist below $205. The price’s reclamation of $180 activated a golden cross between the 50-day and 200-day exponential moving averages, affirming bullish momentum. This formation preceded a 730% surge in SOL between October 2023 and March 2024, suggesting a potential repeat scenario.

The immediate battleground lies around $180. A decisive bounce here would validate the bullish breakout and sustain the new uptrend. Conversely, failure to maintain support could trigger a deeper correction extending to the $168–$157 range—a zone housing both a fair value gap and Fibonacci retracement targets that represent significant multi-month technical support levels.

This sharp correction, following a 56% rally over the past month, appears to be recalibrating after an aggressive appreciation phase. Crypto analysts caution that such pullbacks, even as steep as 9.5%, are frequently healthy market resets in bull markets, offering quality entry opportunities for long-term speculators.

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Disclaimer: This article does not constitute investment advice. Trading cryptocurrencies involves substantial risk of loss. Readers should conduct their own research before making investment decisions.