Solana (SOL) has recently been navigating choppy market conditions, as traders remain divided on its near-term direction. The token has dropped 7.22% in the past week and 3.22% in the last 24 hours, bringing it to $235 at press time. Despite the pullback, some market participants see the current price action as a typical correction, while others warn it may signal a deeper decline.

As SOL approaches the crucial $249 level, uncertainty remains high, with mixed signals from various market indicators. While some traders are positioning for a price rally, others are betting on further declines. This divergence in sentiment has created a tense market environment for Solana holders and potential investors.

Solana Clears Low-Leverage Liquidity

According to analysis from Hyblock, Solana appears to be clearing out low-leverage liquidity levels. This phase of price movement often precedes a potential upward shift, as SOL moves toward the key $249 resistance level. A breakout above this price point could trigger a rally, supported by a significant liquidity cluster. Hyblock’s chart analysis suggests that once SOL surpasses $249, it could experience a substantial upward move.

However, there are still concerns within the market. The current price action, alongside declining buying momentum, has raised questions about whether this retracement is simply part of a larger corrective phase or the start of a deeper downturn.

Surge in Selling Activity Points to Bearish Sentiment

On-chain data is showing a rise in selling activity, which points to a bearish outlook for Solana in the short term. Trading volume has decreased by 9.75%, now standing at $3.72 billion, as price fluctuations continue. In the derivatives market, the Long-to-Short Liquidation model from Coinglass indicates a bearish bias. The long-to-short ratio is currently at 0.8681, well below 1, which suggests that more traders are taking short positions compared to long ones.

This sentiment is further highlighted by liquidation data: in the past 24 hours, long positions worth $6.4 million were liquidated, while short positions amounting to just $348,600 were liquidated. The sharp difference underscores a market skewed toward downside momentum, raising concerns that SOL could continue to fall in the coming days.

Signs of Bullish Activity Amidst Market Volatility

Despite the prevailing bearish sentiment, there are indications that Solana’s price may rebound in the near term. Open Interest in Solana futures has increased by 2.89%, bringing the total to $5.28 billion. A rise in Open Interest often signals renewed trader confidence, suggesting that a rally could be on the horizon if market conditions turn in favor of bulls.

Furthermore, Exchange Netflow data indicates that significant liquidity is moving from exchanges to private wallets, signaling bullish behavior. This outflow of SOL tokens could create a supply squeeze, putting upward pressure on prices and increasing the likelihood of a rally.

What’s Next for Solana?

The market remains divided on Solana’s near-term prospects. While some traders anticipate a break above the $249 resistance level, others are positioning for further declines, supported by growing bearish sentiment and liquidation data.

In the coming days, Solana’s price action will likely hinge on several key factors: the strength of the market rally, the potential for a breakout above $249, and whether the current downturn is merely a correction or the start of a more significant decline.

As Solana approaches this critical juncture, traders should stay alert to key market signals. If the bullish momentum continues to build, Solana could be poised for a strong move upward. However, if selling pressure intensifies, SOL may face further declines in the short term.