Solana Open Interest Plunges Amid Market Volatility
Data reveals that the Open Interest of Solana (SOL) has experienced a significant drop of 20% in the last 24 hours, indicating potential implications for the cryptocurrency’s price.
The Open Interest refers to the total value of derivative contracts, such as futures and options, for a particular cryptocurrency that are currently active across all exchanges. This metric is measured in USD.
An increase in Open Interest suggests that traders are opening new derivative positions, which often leads to higher market leverage and increased volatility. Conversely, a decrease in Open Interest signifies that traders are either closing their positions voluntarily or being liquidated by their platform. This trend generally results in more stable price action for the coin.
Declining Open Interest for Solana, Bitcoin, and Ethereum
Recent data from analytics firm Santiment reveals a notable decline in the Open Interest of Solana, Bitcoin, and Ethereum following Bitcoin’s new all-time high:
- Bitcoin: Open Interest dropped by approximately $1.42 billion (-12%)
- Ethereum: Open Interest decreased by $967 million (-15%)
- Solana: Open Interest plunged by $424 million (-20%)
Among these three cryptocurrencies, Solana experienced the most significant decrease in Open Interest. This decline suggests that investors with various positions were liquidated during this period.
Santiment explains that this drop in Open Interest could be seen as a temporary removal of speculative excess from the market. If funding rates stabilize, prices may fluctuate based on true supply and demand rather than being influenced by futures and options positions.
SOL Price Outlook
After a day of intense volatility, Solana’s price has settled around the $130 mark. It remains uncertain whether the coin will continue to exhibit volatile price action or if it will become more stable. However, considering the decline in Open Interest, there is a possibility of increased stability in Solana’s price.
Hot Take: Potential Stability for Solana Amid Open Interest Plunge
The recent plunge in Solana’s Open Interest suggests a temporary removal of speculative excess from the market. This could potentially lead to more stable price action for the cryptocurrency. If funding rates stabilize and futures and options positions have less influence, prices may be determined by true market valuation based on supply and demand.
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