Solana (SOL) is under increasing downward pressure, with market signals suggesting the popular altcoin could slip below the crucial $200 support level. On-chain data and derivatives market trends indicate that long-term holders (LTHs) are actively liquidating positions, while bearish bets in the futures market are rising, fuelling expectations of a further price decline.

Long-Term Holders Exit as Liveliness Climbs

Data from Glassnode shows that Solana’s “Liveliness” metric has been climbing steadily since early August, now reaching a three-month peak of 0.76. Liveliness measures the ratio of coin days destroyed (the movement of previously dormant tokens) to coin days accumulated.

When liveliness falls, it typically indicates accumulation, with LTHs moving assets off exchanges for long-term holding, a bullish sign. However, the recent climb suggests the opposite: more dormant SOL tokens are being sold into the market. This increase in profit-taking reflects weakening conviction among long-term investors and highlights a bearish turn in sentiment.

Shorts Overtake Longs in Derivatives Market

The bearish tone is reinforced by trends in the derivatives market. According to data from Coinglass, Solana’s long/short ratio stands at 0.97. A reading below 1 signals that short positions outnumber longs, meaning most traders are betting on further downside.

Typically, a long/short ratio above 1 indicates that traders expect an asset’s price to rise. Solana’s current ratio instead reflects a market increasingly convinced that the cryptocurrency will continue to slide, underscoring the fading momentum on the buy side.

Threat of Breaking the $200 Level

With both long-term holders selling and derivatives traders leaning bearish, Solana’s price faces the risk of breaching the $200 psychological support zone. A decisive move below this level could open the door to sharper declines, with technical indicators pointing to a potential fall towards $195.08 in the near term.

The $200 threshold is not just symbolic, it represents a level where bulls have previously defended against heavier losses. Failure to hold this support would likely embolden bears further and accelerate downside pressure.

A Glimmer of Hope if Buying Resumes

Despite the prevailing bearish mood, all is not lost for Solana. If buyers regain confidence and step back into the market, there is room for a rebound. Analysts suggest that a recovery in buying pressure could see SOL rally towards $218.66, restoring some bullish momentum.

However, for such a move to materialise, Solana would need to see fresh inflows from both retail and institutional investors, reversing the current trend of long-term holder distribution and dampening the appetite for short positions in futures markets.

For now, Solana remains caught between mounting selling pressure and the hope of a potential bounce. The immediate battle lies at the $200 mark, with traders closely watching whether bulls can defend this level. A slip below it could drag the price lower, while renewed buying interest may provide the lift needed to test resistance around $218.

In either case, the coming days will be crucial in determining Solana’s short-term trajectory as it navigates through heightened volatility and shifting market sentiment.