Solana faces rising short interest as bears step in

Solana (SOL) short interest has risen over the past week, in tandem with the cryptocurrency’s move to the upside following a two-week period of range-bound trading.

As of May 14, 51.39% of the futures positions opened within the last 24 hours have been shorts, marking a noticeable change from May 8, when Solana’s short interest reached a low of 48.34%, according to data retrieved from crypto analysis platform Coinglass. 

Short interest now sits at a one-month high, raising concerns that Solana’s recent rally, which has seen prices increase by 35.92% in the past month, may face near-term resistance.

Is the increase in Solana short interest a sign that the SOL rally is coming to an end?

Despite the increase in short interest, it remains unlikely that SOL’s recent price action will see a true reversal in the short term. Before the rally, whales loaded up on Solana — and large accounts tend to prefer a long-term, buy-and-hold approach, making it unlikely that profit-taking on an appreciable scale will occur any time soon. 

To boot, decentralized exchange (DEX) volumes and network activity have surged, suggesting healthy, organic demand in the midst of a market-wide uptrend.

In addition, the digital currency has successfully moved past a crucial level of resistance at $175, as highlighted by renowned technical analyst Ali Martinez in a May 12 X post. Should SOL manage to stay above that mark, it could easily flip to become a line of support,

Lastly, Solana’s relative strength index (RSI) is currently at 72 — and while it does indicate oversold conditions,  the indicator has been known to stay at elevated levels for extended periods before a pullback occurs.

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