Solana (SOL) is once again at the center of market speculation after flashing a strong bullish pattern and testing a key resistance zone. Despite a slight dip in price to $176.80 at press time, investor sentiment and derivatives data suggest that SOL may be preparing for a larger upward move. The asset’s recent formation of a classic cup-and-handle pattern on the weekly chart has added fuel to bullish expectations.

The price action has brought SOL to the crucial resistance zone between $180 and $210—a level it has not breached in months. Historically, this pattern often precedes a sustained breakout, and this time, it is backed by strong on-chain and trading metrics.

Funding Rates and Open Interest Signal Growing Confidence

One of the clearest signs of mounting bullish conviction comes from Solana’s derivatives market. Funding rates flipped positive in recent days, indicating that traders are now paying a premium to hold long positions. As of May 23rd, the funding rate stood at 0.00999%—a modest but meaningful indication that bullish bets are outweighing shorts.

Additionally, Open Interest (OI) surged by over 8%, rising to $7.86 billion. This increase suggests traders are increasing their exposure and putting real money behind their expectations. The options market echoed this optimism, with volume jumping 38% to reach $1.64 million—a sign of growing speculative interest in Solana’s next move.

Short Sellers Get Squeezed Around $185

Another key development is the liquidation activity in recent days. Data from major exchanges like Binance and Bybit reveals a sharp increase in short liquidations just below the $190 mark. Over $7.9 million in shorts were wiped out recently—compared to just $1.8 million in long liquidations.

This imbalance strongly suggests that the price rally has caught many short sellers off guard. When heavily leveraged short positions get liquidated, they can create a rapid upward move as sellers are forced to buy back assets to cover losses. If SOL breaks past $190, more short liquidations could follow, setting the stage for an accelerated breakout.

Falling Spot Volume Raises Questions—but Sentiment Stays Strong

While derivatives data paints a bullish picture, spot volume tells a more cautious story. In the last 24 hours, Solana’s spot trading volume dropped by over 30% to $13.99 billion. For some investors, this decline could raise concerns about the rally’s sustainability. Typically, strong rallies are supported by equally strong spot buying activity.

However, sentiment remains positive despite the lower spot volume. Traders appear to be shifting toward leveraged plays in the derivatives market, suggesting that speculation is driving the current momentum. Moreover, Options Open Interest fell by 8.4%, which may indicate that some traders are closing hedges to favor more direct long exposure.

Key Technical Levels to Watch

From a technical perspective, Solana is currently hovering above a crucial support level—specifically, the 0.382 Fibonacci retracement level at $183.67. A sustained hold above this level could pave the way to the next Fibonacci targets at $206.43 and $229.18.

If bullish momentum continues, and volume returns to support the move, the full extension of the current pattern could even push the price toward $302.85 in the medium term. On the flip side, if SOL fails to hold above $183, a drop back to the $155 zone is possible, which would invalidate the bullish setup and potentially attract new shorts.

The Relative Strength Index (RSI) currently sits around 55—suggesting neutral momentum with room for growth. This supports the idea that the rally isn’t yet overextended, and further upside could be on the horizon.

Conclusion: Is Solana’s Next Surge Imminent?

All signs point to Solana preparing for a breakout, with derivative metrics and liquidation data suggesting rising bullish momentum. While the recent drop in spot volume is worth monitoring, it hasn’t yet dampened overall sentiment.

With SOL trading just below a critical resistance range and the market positioned for potential short squeezes, a push past $190 could set off the next leg of the rally. If bulls can maintain control, Solana could be heading toward $206 or even $229 in the near term.