Solana On-Chain Data vs. Price Action: Can SOL Sustain This Rally?

Keyword Financial
Jan 12
5 min read

Introduction

Solana (SOL) price action is gaining traction as bullish sentiment from both retail and “smart money” aligns around a potential breakout, with SOL trading near the $140 area and targeting the key $145 resistance level. At the same time, on-chain data signals a slowdown in network participation, with new weekly wallets falling sharply compared with prior highs—creating a gap between strong market mood and softer underlying usage. This sets up a momentum-driven phase where traders may front-run a move higher even while fundamentals lag.

From a technical analysis standpoint, SOL has broken out of a multi-month descending channel, shifting the broader structure toward recovery and putting buyers in control—if price can hold above former channel resistance. The MACD has flipped bullish with strengthening histogram bars, supporting upside continuation. A clean push through $145 could open the door toward $150 and potentially $170, while a rejection near resistance could trigger consolidation and stall the Solana breakout narrative.

Supporting factors include moderate spot exchange outflows (negative netflows), which can reduce sell-side pressure as tokens move off exchanges, alongside derivatives signals that lean bullish. Short liquidations have outweighed long liquidations, indicating bears are being squeezed as SOL climbs; a decisive move above $145 could intensify forced buying. OI-weighted funding rates have turned positive, showing traders are paying to stay long—constructive for upside in the near term, but worth monitoring if funding spikes and leverage becomes crowded.

Background

Solana (SOL) is back in focus as price action presses into a widely watched resistance zone near $145, with market positioning and technical structure improving at the same time. In recent sessions, SOL has traded around the $140 area while attempting to build enough demand to break higher. This move is notable because it follows a multi‑month descending channel breakout, a chart event that often signals a transition from a corrective phase into a recovery trend. Momentum indicators have also tilted bullish: a positive MACD crossover and rising histogram bars suggest buyers are regaining control, at least in the short term.

That said, this is not a “price-only” story. The setup features an important divergence: sentiment and derivatives positioning look constructive, while network participation metrics appear softer. For a DeFi and fintech audience, that’s a familiar tension—market value can re-rate ahead of usage growth, but sustaining a rally usually becomes easier when adoption trends confirm it.

Technical structure: what the channel break implies

A descending channel is a down-sloping range defined by lower highs and lower lows. When price breaks above the upper boundary, technicians interpret it as potential trend repair—especially if price then holds the former resistance as support. In Solana’s case, the breakout changes the market’s “default expectation” from sell rallies to buy pullbacks, provided follow-through remains intact.

The immediate level that matters is $145. It’s functioning as an overhead supply zone—where previous buyers may be looking to exit at breakeven and short sellers may re-engage. If SOL clears $145 decisively, traders will often look for continuation targets such as $150 and, if momentum persists, higher levels where liquidity tends to cluster. If SOL fails at resistance, the more likely outcome is range trading (consolidation) until fresh catalysts or liquidity conditions shift.

Why it matters for DeFi/fintech participants: SOL is not just a token; it’s also a base asset used for collateral, liquidity provision, and risk-on exposure in on-chain portfolios. A stable breakout can change how market makers price perps, how borrowers manage collateral buffers, and how treasuries think about volatility budgeting.

Spot flows: exchange outflows and what “negative netflows” can (and can’t) tell you.

One supportive signal discussed in the market is exchange net outflows—often described as “negative netflows.” Conceptually:

Inflows (tokens moving onto exchanges) can imply potential sell pressure or readiness to trade.
Outflows (tokens moving off exchanges) can imply storage/holding behavior, reduced immediate sell supply, or movement to custodians/DeFi.

When netflows are negative, it can slightly reduce near-term sell pressure—especially during a push into resistance. However, this indicator is best treated as context, not a standalone trigger. Outflows can also reflect operational moves (custody reshuffles, arbitrage, collateral transfers) and may not always mean “accumulation.”

For this specific SOL setup, the key takeaway is that spot flow conditions appear supportive rather than euphoric—which is often healthier than an overheated spot chase into resistance.

Derivatives positioning: shorts squeezed, funding improves, but leverage is a double-edged sword

Derivatives often explain why crypto can move quickly around key levels. Three concepts matter here:

When price rises, short sellers who used leverage can hit liquidation thresholds, forcing automatic buy orders that push price higher. Recent data showed short liquidations outpacing long liquidations, indicating shorts have been under stress as SOL climbed. If SOL breaks $145, liquidation cascades can amplify volatility upward—especially when liquidity is thinner.

Funding rates (OI-weighted)

Funding is the periodic payment between long and short perpetual futures traders to keep perp prices aligned with spot. When funding is positive, longs pay shorts—typically a sign the market is positioned bullishly. OI-weighted funding helps reflect where capital is concentrated (more meaningful than small-exchange prints).

Positive funding can support a trend when it’s contained. But if funding spikes, it can signal overcrowded longs—a condition that increases the probability of sharp pullbacks if price stalls and late leverage unwinds.

Open Interest (OI) context

Rising OI alongside rising price can be constructive—new participation is entering. But if OI rises too quickly and funding becomes stretched, it can also mean the rally is becoming leverage-dependent.

The adoption tension: sentiment strong, participation softer

One caution flag in this setup is that network participation growth has cooled, based on the reported drop in new weekly wallets compared with earlier peaks. For market structure, that doesn’t automatically invalidate a rally—especially in phases where macro liquidity, positioning, and technical breakouts dominate. But for sustainability, participation metrics matter because organic demand (new users, activity, fees) tends to support higher valuations over longer horizons.

A practical way to frame it:

Short-term price: can be driven by structure + positioning + liquidity.
Medium-term trend: becomes more durable when usage and participation expand.

Scenarios to watch around $145

Bull case: clean breakout and hold

SOL breaks $145 with strong spot follow-through (not just perps).
Funding stays positive but not extreme.
Pullbacks hold above former resistance / channel top.
Likely result: higher targets come into play and volatility expands upward.

Base case: consolidation under resistance

SOL churns between ~$140–$145.
Funding cools, OI normalizes.
Likely result: market waits for a catalyst; range strategies dominate.

Bear case: rejection with leverage flush

Failed breakout triggers long de-risking.
Funding/OI unwind accelerates.
Likely result: a quick drop back into prior ranges before attempting another build.

Outside context worth noting (institutional flows & broader market positioning)

While this analysis focuses on SOL’s immediate technical and positioning setup, broader digital-asset flow data can influence how traders think about risk appetite in altcoins. For example, CoinShares’ weekly fund flow reporting has highlighted how capital rotations between majors and select large-cap altcoins can shift quickly as macro and regulatory narratives evolve (Invezz citing CoinShares). Even when not directly tied to SOL’s spot market microstructure, these flow regimes can affect sentiment, volatility expectations, and correlation risk for DeFi portfolios.

Bottom line

Solana is approaching a pivotal technical threshold at $145, supported by a breakout from a descending channel, steadier spot-flow conditions, and derivatives positioning that currently favors bulls. The main risk is that price strength is arriving alongside softer participation metrics—meaning momentum is leading fundamentals. For DeFi and fintech readers, the actionable takeaway is to treat $145 as the inflection point: a convincing break and hold can reprice SOL’s near-term trend higher, while a rejection would more likely produce consolidation or a leverage-driven pullback.