Solana price ended below the 200-day EMA support at $196 after falling more than 13% this week. This recent decline brings total liquidations to $38 million, of which over $33 million came from long positions. Traders need to remain cautious as SOL's TVL has fallen more than 7% in one day.
Solana (SOL) price is trading in the red below $194 on Friday after falling more than 13% this week. Due to the recent economic downturn, total liquidations amounted to $38 million, of which over $33 million came from long positions. Traders need to remain cautious as SOL Total Value Locked (TVL) has fallen more than 7% in one day, signaling a double-digit correction ahead.
Solana price is set for a downside as it closes below the $196 support level
Solana price faced resistance near the $230 level on Tuesday. SOL fell 13% over the next two days, closing below the daily support level of $201.85 and the 100-day exponential moving average (EMA) of $196 on Thursday. As of writing on Friday, it is trading below the 100-day EMA around $194.
If the $201.85 level holds as resistance, SOL will extend the decline by 10% to retest the next support at $174.85 (200-day EMA).
The Relative Strength Index (RSI) indicator on the daily chart is 35, below the neutral level of 50 and trending downward, indicating strong bearish momentum.
SOL/USDT daily chart
The recent price drop on Thursday triggered a wave of liquidations, removing positions of leveraged traders across the SOL ecosystem. According to CoinGlass data, the economic downturn has resulted in total liquidations of over $38.86 million, of which $33.57 million came from long positions.
Such liquidations could create fear, uncertainty, and doubt (FUD) among SOL investors, increasing selling pressure and leading to further price declines.
SOL Total Liquidation Chart. Source: Coinglass
Another factor adding to the bearish outlook for Solans is the sharp decline in Total Value Locked (TVL). According to DefiLlama data, SOL TVL fell from $11.22 billion to $10.35 billion, a drop of more than 7% in one day. A similar decline in TVL was also observed on August 3 and October 29, with the price dropping more than 10% in the following days. If history repeats itself, SOL could face a similar price decline.
SOL TVL chart. Source: Defilama
Even though on-chain indicators and technical analysis support the bearish outlook, this hypothesis will be invalidated if SOL price recovers and closes above the $201.8 resistance level. This recovery will lead to an increase in prices and a retest of the next resistance level at $230.
