Solana (SOL) faces additional fall risks as main support weakens, retail investor cash flow declines.

The price of Solana (SOL) plummeted over 6% during Monday's trading session, putting pressure on the support zone of 174–177 USD after encountering strong resistance at the (EMA) 200-day moving average. Data from the derivatives market reflects a prevailing pessimistic sentiment, with many traders forecasting that the downward trend will continue.

However, the capital outflow from the spot market along with the inflow of money into Solana spot ETFs in the US last week still opens up opportunities for a recovery, keeping the recovery outlook from being ruled out.

The Solana bear group dominates the derivatives market

Solana is gradually losing its appeal to retail investors as overall market volatility reduces risk appetite. According to data from CoinGlass, the open contract (OI) of the SOL futures contract fell by 1.56% in 24 hours, to 10.16 billion USD, reflecting the trend of reduced leverage usage or investors closing some positions.

The situation has become increasingly bleak as the funding rate remains at -0.0078%, indicating that market sentiment leans towards the bears, with traders willing to pay fees to maintain short positions.

The negative picture is becoming clearer through the liquidation volume: buy order (Long) reached 43.10 million USD in 24 hours, far exceeding the 1.90 million USD of the sell order (Short). This indicates that a large number of bullish investors have been “swept away” from the market. As a result, the long/short ratio dropped to 0.9102, demonstrating the dominance of short positions.

Data on SOL derivatives | Source: CoinGlass.## Solana is at risk of breaking important support

At the time of writing, Solana (SOL) is trading around 175 USD, falling over 6% on the day and facing the risk of breaking the support zone of 174–177 USD — coinciding with the trend line connecting the lows of 1/7 and 10/10.

If SOL closes below the 174 USD level, the breakout signal will be confirmed, opening the possibility of a deep correction to the support zone of 153–156 USD, equivalent to a decrease of nearly 10% from the current price.

Currently, SOL is below the 200-day EMA, while the 50-day and 100-day EMAs are trending downwards, signaling the risk of forming a “death cross” ( — a strong sell signal as the short-term downtrend accelerates.

![])https://img-cdn.gateio.im/webp-social/moments-20e7112fe1fbd83a5860045c33309d0f.webp(Daily chart of SOL/USDT | Source: TradingViewThe momentum indicators on the daily timeframe also lean towards a bearish trend. The MACD line is converging with the signal line; if a bearish cross is formed, the downward momentum will be further reinforced. Meanwhile, the RSI at 37 indicates that selling pressure is increasing, and with the remaining gap before the oversold zone, SOL still has room for further adjustment.

On the contrary, if SOL rebounds from the zone of 175 USD, this coin could test the 200-day EMA around the mark of 187 USD.

Can Solana “trap” the bears?

Although demand from retail investors is showing signs of decline, the launch of Solana spot ETFs in the US last week indicates that institutional capital is still maintaining stability towards Ethereum's top competitor. According to data from Sosovalue, Solana has recorded four consecutive sessions of capital inflow, totaling 199.21 million USD in the week ending October 31. If this trend continues, the funds from institutions could become a driving force to help SOL recover its price.

![])https://img-cdn.gateio.im/webp-social/moments-71c243ddfc53e020b392d8e8ce2dcd9c.webp(The capital flow into SOL ETF spot funds in the United States | Source: Sosovalue.Adding positive signals, the net capital flow data for the day in the spot market shows a net outflow of 75.76 million USD as of Monday. This may imply that investors are buying at a discounted price or withdrawing tokens from the exchange for cold storage, reflecting long-term confidence in Solana.

![])https://img-cdn.gateio.im/social/moments-eea6fe8043a62dfc36d4b9aa3d26a020(Net inflow of spot SOL | Source: CoinGlass.Currently, Solana is at a critical crossroads amid strong market volatility, which could result in losses for both buyers and sellers. To limit short-term risks, traders should wait for a clear candle closing signal before opening a short position )Short(.

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