After the collapse of FTX, traders have since turned to shorting SOL. Although the price may have increased in the past 24 hours, the outlook still appears bearish.
With the last few days marked by a decline in Solana’s [SOL] price, on-chain data revealed that short traders have been continuously betting on a sustained decline in the price of the alt.
According to data from CoinMarketCap, the price of SOL dropped more than 60% between November 19 and 22, and this drop led many to take trading positions against the price of the alt.
Read Solana’s [SOL] price forecast 2023-2024
Data from on-chain analytics platform Sanitation revealed that SOL started short trading shortly after the collapse of FTX. In addition, FUD sentiment was gaining ground in the market in terms of Solana’s level of exposure to the impact of FTX. On November 10, SOL registered a huge short position on Binance as funding rates fell significantly below -1.5%.
😒 There are not many big ones #Solana believers, even as the price bottomed out at $11.02 and recovered to $12.70 in the past 15 hours. This one #FUD could cause more rebounding until traders slow down their near-unanimous bets against it $SOL‘s price. https://t.co/e2jSAmLEqf pic.twitter.com/1qisr8inaj
— Santiment (@santimentfeed) November 23, 2022
However, SOL’s 13% rally in the past 24 hours and data from Santiment revealed that investor sentiment turned positive. Should SOL continue to recover, traders against the alt would inevitably be thrown into losses.
As noted by Santiment, the FUD in the market “may cause more rebound until traders slow down their near-unanimous bets against the price of $SOL.”
A token for your SOL
At the time of going to press, the price of SOL was up 13% in the past 24 hours. With $667 million worth of SOL traded in the last 24 hours, trading volume was also up 58%.
In addition, the positive increase in SOL’s price and trading volume over the past 24 hours was an indication of the positive belief the coin has left behind. However, movements on the daily chart showed sellers overpowering buyers on the daily chart.
Between Nov. 9 and Nov. 22, SOL’s Relative Strength Index (RSI) remained below 30. This showed that since the collapse of FTX two weeks ago, the significant reduction in buying pressure caused the alt to become oversold.
However, the price rally of the past 24 hours changed the RSI trend. While still far from the 50 neutral spot at the time of writing, it was on an uptrend at 31.97. This showed that buying momentum had started to pick up, albeit at a considerably slower pace.
While the coin distribution was still in progress, a look at the exponential moving average (EMA) position revealed that the 20 EMA (blue) was below the 50 EMA (yellow) line. This depicted the strength of the sellers in the market versus those who were accumulating.
Finally, the Directional Movement Index (DMI) showed the strength of the sellers (red) at 34.89, firmly above the buyers (green) at 11.11.
Source: TradingView
This post Going short on SOL? The latest price action may convince you to think twice
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