Solana's Momentum Grows: Is SOL Ready to Break Through $145?

Solana (SOL) is edging closer to the $145 mark, buoyed by positive market sentiment, but on-chain data reveals a more complex picture. Despite growing optimism, the drop in new wallets may be a cautionary sign. As Solana breaks out of a prolonged downturn, traders are eager to see if the rally can be maintained. This article explores the technical indicators and market dynamics that will influence Solana's ongoing performance.

Key Takeaways

Solana is approaching the $145 resistance level with bullish sentiment.
New wallet creation has significantly decreased, raising concerns about sustained market interest.
The recent price breakout from a descending channel indicates potential trend recovery.
Exchange outflows support the price rally by reducing sell-side pressure.
Liquidation data shows that short positions are under stress, which may favor buyers.
Positive funding rates signal trader confidence in long positions.

Solana's momentum accelerates – Is SOL's $145 ceiling about to break?

Is SOL's Momentum Sustainable?

As Solana makes its push towards the critical $145 threshold, both the general market and sophisticated investors are leaning towards a bullish outlook. This optimism is contributing to the belief in a sustained rally. However, there is a notable contradiction in on-chain metrics: new weekly wallets have significantly decreased from 30.2 million in November to just 7.3 million recently.

This discrepancy is important because price momentum traditionally benefits from increasing participation rather than retraction. Nonetheless, traders seem eager to speculate on a potential breakout despite these underlying concerns. While sentiment drives current pricing, real network growth is necessary to keep up this positive momentum.

Breaking out of the Downtrend

Solana's recent breakout from a descending channel marks a shift in its broader technical outlook. As of early press time, the price was hovering around $140, with the immediate barrier at $145. Should it surpass this level, the price movement could extend to $150 and even $170.

The MACD indicator supports this upward movement, displaying a bullish trend accompanied by rising histogram bars, which suggest strengthening momentum. However, for this bullish intent to be validated, Solana must maintain its position above the previous channel resistance. Failure to hold this level could lead to another phase of consolidation, making it imperative for buyers to sustain pressure to confirm the trend change.

Solana price action Source: TradingView

Exchange Outflows Offer Support

Analysis of spot market data indicates that netflows remain negative, with withdrawals from exchanges continuing. Just recently, netflows showed a figure of around -$1.53 million, while the price hovers near $140. This trend suggests lowered selling pressure, as tokens shifting off exchanges typically reflect a holding mindset rather than active selling. However, it should be noted that these outflows, while steady, are not exceptionally high.

This dynamic provides moderate support for the rally, tightening supply without showing signs of exhaustion. Prices may continue to rise under these favorable conditions, although any inflows could reverse sentiment quickly if selling surfaces near resistance levels. Currently, spot flows slightly favor bulls, offering a stable base for increasing prices.

Source: CoinGlass

Short Positions Are Under Pressure

Recent liquidation data indicates rising strain on short-selling positions as Solana's price continues its ascent. On January 12th, total liquidations for shorts reached about $7.24 million, significantly eclipsing long liquidations of around $3.75 million. Binance and Bybit accounted for a significant portion of the losses among these short positions.

This imbalance suggests that bearish traders are struggling with the ongoing rally. If Solana pushes through the $145 resistance level, it could trigger another wave of forced liquidations that accelerates upward price volatility, putting buyers in a favorable position.

Source: CoinGlass

Funding Rates Indicate Strong Long Positions

At the time of writing, Open Interest-Weighted Funding Rates had turned positive, reinforcing a bullish conviction among traders. With a funding rate of 0.0072%, it indicates that traders are willing to pay to maintain their long positions, reflecting strong confidence rather than hesitation.

The Open Interest-Weighted data helps filter out noise and pinpoint where investment capital is focused. Nonetheless, rising funding rates also introduce some risk, as crowded long positions can unwind quickly if prices settle down. Currently, funding levels remain controlled, allowing leverage to support upward movement without creating instability. As long as positive funding is sustained without overheating, Solana has the potential to maintain upward pressure.

Source: CoinGlass

Can Solana Break Through $145?

Solana has garnered enough structural momentum and positioning strength to challenge the $145 resistance level confidently. Although there has been a slowdown in network growth, current price actions indicate that traders hold the steering wheel rather than overall usage growth.

This situation reveals that momentum is currently leading over fundamental aspects. As long as the positioning remains controlled and supply remains limited, Solana's rally holds potential, possibly allowing the asset to breach $145 and sustain upward pressure in the near future.

Conclusion

As Solana navigates the critical $145 barrier, market dynamics suggest a favorable outlook, albeit tempered by caution regarding on-chain data. Continued attention to trader sentiment, exchange flows, and funding conditions will be crucial in assessing the direction of SOL's price action in the upcoming days.