What The Solana Open Interest Is Saying About The Cryptocurrency Right Now
Solana’s derivatives market is signaling
Total Solana Open Interest. Source: Coinglass
There is an important relationship between price and open interest. Whenever an asset’s price rises alongside open interest, it means new money is entering and momentum is being reinforced. On the other hand, when price falls and open interest also falls, it usually points to a reset, where positions are being closed and leverage is being removed from the system.
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This can be read in two ways. The bearish reading is that fewer leveraged traders means less immediate buying pressure and less momentum support, which can leave price vulnerable if spot demand does not step in. The more constructive reading is that a large part of the excess leverage has already been washed out.
At the time of writing, Solana is trading at $83.51, down by 2.7% in the past 24 hours.
Featured image from Unsplash, chart from TradingView
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