Solana eclipses XRP & DOGE in this metric, but it’s not all good news

• SOL’s liquidity has increased, but its price has not remained stable.
• Traders’ bullish sentiment failed to halt a $3.90 million liquidation.

Solana [SOL] has become one of the altcoins with very high liquidity on Coinbase, according to market research platform Kaiko. Having high liquidity sometimes enables price stability and less volatility.

Realistic or not, here it is SOL’s market cap in XRP terms

SOL’s health is not wealth

And as a measure of the supply and demand of an asset, SOL’s high liquidity is an indication of a healthy market on its side. According to Kaiko, the increase in liquidity caused SOL to perform faster Ripple [XRP], Dogecoin [DOGE]And Polygon [MATIC] according to the metric.

📈 $SOL has become one of the most liquid altcoins on Coinbase pic.twitter.com/0vGJ1hEiY8

— Kaiko (@KaikoData) August 16, 2023

Leading altcoins in terms of liquidity is perhaps not surprising when you consider how SOL performed better most assets in the market lately. However, in addition to this remarkable performance, SOL has faced its fair share of challenges as the price has experienced a recent downturn.

Based on CoinMarketCap data, SOL lost 4.22% of its value in the past seven days. From the four-hour SOL/USD chart, the altcoin formed a bearish market structure.

As of August 15, SOL attempted to hold support at $23.96. Unfortunately, there was little to no buying pressure to curb the increasing selloff. Thus, this led the support to fall to $22.90.

While SOL has moved slightly above the $22 region, volatility has become really extreme, as indicated by the Bollinger Bands (BB). The lower band of the BB also touched the price of SOL earlier, indicating that the altcoin was oversold.

While there has been a slight reversal in the trend, the Moving Average Convergence Divergence (MACD) showed that momentum remained largely in bearish control. Negative MACD readings indicate that the 12-day EMA is lower than the 26-day EMA.

Source: TradingView

And at the time of writing, the MACD was -0.13. Unless the demand for SOL outweighs the selling pressure, the altcoin price could drop to $20.

Optimism gives the opposite result

Despite SOL’s downward trend, the funding rate was positive, based on Santiment’s data. Typically, a negative funding rate means that short positions outperformed long positions. However, the positive SOL funding rate implies that the average trader’s sentiment towards SOL was optimistic.

Just like the funding ratio, the weighted sentiment was also in the positive region. The weighted sentiment takes into account the unique social volume regarding opinions about an asset.

When the statistic is positive, it means that the average perception of an asset is optimistic. Conversely, negative weighted sentiment suggests the opposite. And SOL supported the former.

Source: Sentiment

Is your wallet green? Check the Solana profit calculator

Meanwhile, information from derivatives tracking portal Coinglass revealed that approximately $3.90 million SOL positions have been wiped out in the last 24 hours.

Also, longs accounted for $2.94 million from those that were liquidated. In contrast, the liquidated shorts positions were worth $952,670.