Solana Price Breaks Key Support Level – Could a 20% Correction Be Next for SOL?

Solana price It has finally broken out of a long plateau, but not in the direction the bulls were hoping for. After spending nearly four months trading within a well-defined range, SOL slipped below the lower bound, triggering a sharp decline towards the $72 region. Although the token has managed a modest rebound, the crash has raised concerns that the recent consolidation may have been a distribution phase rather than a base for a bullish continuation.

Furthermore, momentum indicators are weakening, cross-chain participation is declining, and derivatives data indicate a decline in market sentiment. Thus, Solana now faces a decisive test, and the coming sessions may determine whether he can regain the lost scope of support or not.

Solana Price Analysis: Breakout below key support changes momentum towards downward movement

The daily chart suggests that Solana’s recent weakness is more than just a routine pullback. After repeatedly defending the $76-$78 support area since February, SOL finally fell below the range. This level has served as a critical demand zone for several months, making the recent collapse an important technical development for traders.

While the price has rebounded from recent lows near $72, SOL continues to trade below its previous support range. Unless the bulls reclaim this area quickly, the recent rebound could be viewed as a comfort rally rather than the beginning of a sustainable recovery.

The daily RSI fell below the oversold threshold, reflecting intense selling pressure across the market. Although such conditions can lead to short-term bounces, they rarely signal a trend reversal on their own. The On-Balance Volume (OBV) indicator continues to trend downward, indicating that capital outflows are still dominant and that buyers have not yet regained control of the trend. However, both have shown bullish divergence, keeping bullish hopes alive.

Derivatives data signals weaken bullish conviction

Data shows that the funding ratio has recently turned negative, suggesting that short sellers are increasingly willing to pay a premium to maintain bearish positions. While negative funding can sometimes precede a short squeeze, the current reading primarily reflects growing bearish expectations among leveraged traders. Open interest data adds another layer of concern. After peaking above $4 billion in May, open interest has fallen sharply to roughly $3.2 billion.

The combination of low open interest rates and negative financing rates indicates weak market conviction. This trend is further supported by lower trading volume, indicating that buying pressure remains weak despite the recent recovery. Unless Solana sees a meaningful rebound in trader participation and capital flows, the current rebound may have difficulty developing into a sustainable uptrend.

Can Solana avoid another 20% decline?

Solana now finds himself at a crucial technical crossroads. A successful recovery above $78 could undo the recent collapse and improve the chances of a broader recovery. However, the risk remains tilted towards the downside as long as SOL trades below the broken support level. The next major demand area is near $67, a level that could provide temporary relief if selling pressures persist.

A decisive break below this support would expose the token to the lower $60 area, representing a potential decline of ~20% from current levels. While preferring to be wary of momentum indicators, volume trends and financial derivatives data, traders may continue to monitor the $76-78 range as the key level that may determine Solana’s next major move.

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