Solana (SOL) Price to Defy Odds — $200 Recovery Possible Despite Negative Funding Rate

Key Takeaways

• Despite a breakout above a falling channel on the weekly chart, the MACD shows a bearish divergence.
• Solana’s negative funding rate suggests aggressive short positions, which could be bullish.
• The CMF and RSI indicate rising bullish momentum, with SOL aiming for a short-term target of $171.43.

Solana’s (SOL) price briefly pushed through $150 last Friday, reaching that level for the first time since March 3. This happened after the altcoin resisted falling below $100 again despite being in those shoes some weeks back.

Amid this bounce, Solana has seen an increase in bullish sentiment. However, with April ending, this perception of cryptocurrency’s price action seems to be changing again.

In this analysis, CCN reveals what could happen to SOL’s price in the short term despite several bets that it could pull back.

Solana Rises Amid Bearish Divergence

On the weekly SOL/USD chart, the altcoin’s price has broken above the falling channel that had existed since January. This breakout hinted at a sustained bullish breakout for the cryptocurrency, with analysts calling for Solana to climb closer to its all-time high.

However, a look at the Moving Average Convergence Divergence (MACD) shows that Solana’s price has formed a bearish divergence. This bearish divergence appeared because SOL’s market value has increased by 18% in the last seven days.

However, the MACD reading has remained negative. This indicates bearish momentum, suggesting that bulls might struggle to keep the coin trading higher.

Shorts Dominant, but Not Rewarded

This position could also explain Solana’s negative funding rate. According to Santiment data, SOL’s funding rate has dropped to -0.0015%.

The funding rate is the periodic fee paid between traders in a perpetual futures contract to keep its price aligned with the spot market. It is calculated based on the difference between the perpetual contract price and the spot value.

When the funding rate is positive, the perp is trading at a premium to the spot price. In this case, longs pay shorts the funding fee, and the sentiment is bullish.

However, when the funding rate is negative, the perp trades at a discount to the spot price, so shorts pay longs. From a trading perspective, the highly negative funding rate while Solana’s price has increased means shorts are aggressive, but not getting rewarded for their position.

This is potentially bullish for SOL if the trend remains the same. Thus, in the short term, Solana’s price will likely resist this sentiment and push closer to $200.

SOL Price Analysis: Bullish Indicators Align

On the daily chart, SOL has risen above the upper trendline of the descending channel. This breakout ensured that Solana’s price kept hitting lower highs, which is bullish for the cryptocurrency.

In addition, the Chaikin Money Flow (CMF) reading is above zero, indicating notable buying pressure. Like the CMF, the Relative Strength Index (RSI) reading has also increased, indicating bullish momentum.

Should this trend remain the same, SOL’s short-term target could be a quick run to $171.43 at the 0.618 Fibonacci level. If the broader market condition continues to improve, the altcoin’s value could break above $200.

On the flip side, this prediction might not become a reality if buying volume fades. In that case, Solana’s market value could decline below $120.