Solana Analyst Remains Bullish Despite Concerning On-Chain Metrics, as SOL Bears Aim to Breakdown This Crucial Resistance

Cryptonary, a pseudonymous crypto analyst, remains cautiously bullish on Solana (SOL) despite some concerning on-chain metrics. In a recent Twitter thread, they argued that while SOL looks poised for a breakout above key resistance at $61, the growing number of shorts indicate bears are betting on a breakdown soon.

Bears Piling on Shorts While Longs Decline

According to Cryptonary, open interest in SOL recently hit $850 million, nearing its yearly high of $933 million. However, over the past 8 hours, the open interest-weighted funding rate has slid from 0.016% down to 0.010% even as open interest rises.

As Cryptonary explained, “The Long/Short ratio is 0.9631, indicating more participants have piled into Shorts than Longs. It is a very different setup from BTC and ETH.” With shorts outweighing longs while funding slides, it seems clear traders are positioned for SOL to fall through support.

Crucial Resistance Holds the Key for SOL’s Next Move

Currently SOL is pressing up against resistance at $61. As Cryptonary noted, “SOL is really on the cusp here; a break above $61 could see a meaningful breakout higher to $69 and even $80.”

However, they cautioned that the move could go the opposite way, saying “these Shorts may be vulnerable to a squeeze, particularly if SOL breaks out of $61.” A breakout could trigger a short squeeze and push SOL sharply higher. Yet if $61 fails to hold, the influx of shorts could accelerate a breakdown for the token.

Cautious Optimism Despite Warning Signs

While noting concerning signs like bearish RSI divergences on higher timeframes, Cryptonary ultimately struck an upbeat note on SOL: “We’ll add to our long-term bags if SOL can pull back to $52 with light DCA Spot buys. If SOL pulls back to $48, we’ll be even more aggressive with our DCA Spot buys down to the low $40s.”

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So even as on-chain data flashes warning signs of growing bearish sentiment, this analyst remains a SOL bull based on potential buying opportunities at lower levels. The coming move once SOL either breaks $61 or fails the key resistance should give more decisive insight into trader positioning.

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Temitope Olatunji
Temitope Olatunji

Temitope is a seasoned writer with over four years of experience. He specializes in Web3 and FinTech topics and enjoys creating content in these areas. He holds both a bachelor's and master's degree in Linguistics. When not writing, he trades forex and plays video games.