Solana’s decisive moment as bears and bulls meet $170

• Solana broke free from weeks of sideways motion with a clear reclaim of $170.
• Is that this the beginning of a bigger development reversal, or only a breakout fakeout?

After weeks of range-bound chop, Solana [SOL] snapped again with a vengeance, breaking out to a two-month excessive of $164 on the eighth of Might. 

The surge lit up the charts, pushing the RSI deep into overbought territory – music to the ears of bearish merchants. 

Sensing a possible blow-off high, short-sellers swarmed in, stacking up leveraged positions in hopes of catching a pointy reversal. What unfolded as an alternative was a textbook brief squeeze, catching late bears off guard.

However was this only a volatility blip in a uneven vary, or is SOL constructing the structural momentum wanted for a full-blown development reversal?

The nice bear fade

As AMBCrypto beforehand famous, Solana’s breakout above $170 wasn’t only a random spike. It was underpinned by stable structural demand and clear technical alignment.

Bulls executed with conviction at a key psychological resistance, flipping it into assist and reclaiming a high-FOMO provide zone on sturdy quantity. Consequently, almost $20 million in brief positions have been worn out.

Lookonchain information captured one such aggressive bet. A pockets deposited $1.21 million in USDC to open a 20x leveraged brief on SOL at $164.9. 

The place ballooned to 97.5k SOL, with a decent liquidation stage at $172.96. If SOL inches larger, that commerce dangers a compelled exit. One other brief squeeze brewing? All indicators level to sure.

Solana’s risk-zone: The value of conviction

At press time, Solana traded at $171.87, organising a possible liquidity entice for bears – once more.

However this rally’s destiny rests on bull conviction. If FOMO fades, what was as soon as bullish momentum may rapidly flip into a pointy reversal.

Indicators of weak point are beginning to emerge. Solana’s active address count has dropped sharply from 6.10 million to five.40 million, representing an 11.46% decline in a single-day.

On high of that, the MVRV (Market Worth to Realized Worth) ratio is now sitting comfortably above 1, suggesting that SOL is buying and selling effectively above its realized value foundation. 

Supply: Glassnode

In different phrases, the market is flirting with overvaluation – prime situations for a possible profit-taking cycle to kick in. 

Shorts are positioning themselves based mostly on these on-chain indicators. If structural demand continues to weaken, they may capitalize on the potential draw back.

Solana is, certainly, in a high-stakes gamble. The momentum is leaning bullish, as market-wide FUD is at a lull. 

However a full-on rally? That also looks like a stretch. Bears are nonetheless within the combine, ready for the best sign to reverse the development.