- Solana has surged nearly 20% on the week, outperforming its rivals.
- Are leveraged “long” positions a sign of a broader structural shift?
No doubt, Q2 kicked off with bullish momentum for Solana [SOL], which has posted a nearly 20% weekly rally, reclaiming key mid-March supply zones.
However, the rally appears far from organic. Derivatives metrics reveal a pronounced long-side imbalance, with over 70% of Binance Open Interest (OI) skewed to the upside.
Typically, such a leverage-heavy structure, if not underpinned by sustained spot inflows and firm bid-side absorption, increases the probability of a liquidation cascade on any sharp retracement.
With that in mind, AMBCrypto investigated: Is SOL primed for a classic liquidity sweep and mean reversion? Or, are leveraged participants front-running something much bigger?
Strategic positioning behind Solana’s long bias
This week proved crucial for Solana. Now, key developments could set the stage for the next phase of its Q2 expansion.
Canada led the charge. The country launched the world’s first spot Solana ETFs (Exchange-Traded Funds) on the Toronto Stock Exchange, marking a significant step in institutional adoption.
Meanwhile, DefiDevCorp, a notable player in the decentralized finance (DeFi) space, made headlines by acquiring $10.5 million worth of SOL.
In fact, this bold move has earned them the moniker “the MicroStrategy of Solana,” as their SOL treasury now totals 163,651.7 SOL – approximately $23 million in today’s market.
At the same time, Galaxy Digital appears to be quietly bolstering its Solana portfolio.
The firm has withdrawn an additional 150,221 SOL (roughly $19.98M) from Binance, pushing their total withdrawals to $58 million since the 14th of April.
Hence, these institutional inflows have catalyzed a 20% weekly surge in SOL, with Futures Open Interest (OI) peaking at $3.34 billion and reclaiming late-March resistance levels at $134.
Source: Glassnode
Looking ahead: Preventing another OI drawdown
As seen in the chart above, long accumulation during the Q4 rally last year coincided with Solana’s $294 ATH in January. During this time, OI reached a peak of $6.8 billion.
However, as risk-off sentiment permeated the market amid broader macro pressures, we saw a sharp deleveraging event, with OI unwinding amid liquidating positions. By the end of Q1, OI had retraced to $2 billion.
Looking ahead, if institutional inflows continue to bolster Solana’s liquidity, it could mitigate the risk of a similar event. What, then, are the odds?
Solana’s Q2 technical outlook remains bullish, with significant upside potential.
Since SOL’s recent dip to $100, over 200k new wallet addresses have been onboarded, signaling robust user adoption.
Source: Glassnode
Coupled with institutional accumulation, bullish longs, and a rising tide of market optimism, we find a ripe moment for “dip-buying”, setting the stage for a potentially powerful Q2 for Solana.