Solana is under pressure this week. While Bitcoin briefly pushed the market higher, SOL appears to be sinking further. New data shows that liquidity is rapidly drying up, meaning less money is available for buying and selling, which can accelerate price declines. At the same time, hundreds of millions in leveraged positions are at risk of liquidation if the price drops. However, there are some bright spots, such as new exchange-traded funds (ETFs) and interest from large investors. For now, the situation remains tense.
Falling Liquidity Creates Risks for Solana #
According to data from Glassnode, Solana investors have been realizing more losses than profits for weeks. This is often a sign that liquidity is drying up and traders are becoming more cautious.
Analysts refer to this as a liquidity reset—a phase where trading activity declines, investors become calmer, and the market prepares for a new cycle. This has also happened in previous market cycles, usually just before a new bottom was found.
Another problem is the large number of open leveraged positions. Approximately €430 million in long positions are at risk if the price falls towards €110.
Such a wave of liquidations can further increase downward pressure. A large-scale cleanup in the short term is painful, but in the long run, it can create space for a more stable market.
Also playing a role is that recent price fluctuations in Bitcoin caused enormous liquidations across the entire market. This shows that sentiment is still fragile and that even small movements can have major consequences. As a result, many traders remain cautious and the pace of recovery is slow.
Growth of Crypto Funds Continues, But Enthusiasm Wanes #
Meanwhile, the interest from major financial players remains visible. With the new fund from Franklin Templeton, the count now stands at seven Solana ETFs. These funds offer an easy way to invest in Solana without having to manage the tokens yourself.
The funds initially performed strongly, recording significant daily inflows. This has since decreased, however.
Last week, the funds saw substantial outflows on several days. Recently, there has been a new inflow again, although it is lower than before.
Solana is therefore in a phase of both tension and opportunity. The short term remains risky due to weak liquidity, but the continued interest from major parties could still lead to recovery and stability within the network in the long term.