Solana's $21M Bloodbath: SOL Hits 2-Month Bottom Amid Crypto Market Plunge

Solana ( SOL ) has faced sharp declines, briefly falling to a two-month low amid a widespread slump across the cryptocurrency market, driven largely by Bitcoin's depreciation. Although SOL has managed a modest recovery, the significant impact remains evident with over $21 million in long liquidations over the last 24 hours.

Increasing bearish conditions continue to present risks to long positions within the SOL futures market.

On Monday, Solana's price dramatically plunged to a 68-day low of $168.88, largely influenced by Bitcoin's fall below the key $90,000 support level. Despite a minor recovery, substantial pressure remains on long positions in the derivatives market.

Recent data from Coinglass indicates that in the past 24 hours, Solana's market recorded total liquidations of $25.48 million, with $21.38 million from long positions and $4.10 million from short liquidations. Liquidations transpire when an asset's price shifts unfavorably against a trader's stance, leading to forced closure due to inadequate funds.

For SOL, this scenario results in long traders being pressured to sell at diminished prices to mitigate their losses when the market dips below certain thresholds. Consequently, Solana's derivatives traders have initiated position closures, reflected in the coin's decreasing open interest, which has dropped by 3.47% over the past 24 hours.

Open interest serves as an indicator of the total outstanding futures and options contracts yet to be settled. A decrease in open interest suggests traders are unwinding positions, possibly leading to reduced market engagement and a potential future dip in asset valuation.

As bearish momentum intensifies, Solana struggles to surpass the significant $188.96 resistance level. Continuing sell-offs could drive SOL's price further down to $170.41, risking further long position liquidations. Should bearish pressure diminish and bullish sentiment rise, the coin might surge beyond $188.96 and target $218.90.

This development underscores the volatility and rapid shifts in the cryptocurrency sphere, highlighting opportunities and risks alike.