Solana’s decisive moment as bears and bulls meet $170

Solana broke free from weeks of sideways action with a clean reclaim of $170. Is this the start of a larger trend reversal, or just a breakout fakeout? After weeks of range-bound chop, Solana [SOL] snapped back with a vengeance, breaking out to a two-month high of $164 on the 8th of May. The surge lit up the charts, pushing the RSI deep into overbought territory – music to the ears of bearish traders. Sensing a potential blow-off top, short-sellers swarmed in, stacking up leveraged positions in hopes of catching a sharp reversal. What unfolded instead was a textbook short squeeze, catching late bears off guard. But was this just a volatility blip in a choppy range, or is SOL building the structural momentum needed for a full-blown trend reversal? The great bear fade As AMBCrypto previously noted , Solana’s breakout above $170 wasn’t just a random spike. It was underpinned by solid structural demand and clean technical alignment. Bulls executed with conviction at a key psychological resistance, flipping it into support and reclaiming a high-FOMO supply zone on strong volume. Consequently, nearly $20 million in short positions were wiped out. Lookonchain data captured one such aggressive bet . A wallet deposited $1.21 million in USDC to open a 20x leveraged short on SOL at $164.9. The position ballooned to 97.5k SOL, with a tight liquidation level at $172.96. If SOL inches higher, that trade risks a forced exit. Another short squeeze brewing? All signs point to yes. Solana’s risk-zone: The price of conviction At press time, Solana traded at $171.87, setting up a potential liquidity trap for bears – again. But this rally’s fate rests on bull conviction. If FOMO fades, what was once bullish momentum could quickly flip into a sharp reversal. Signs of weakness are starting to emerge. Solana’s active address count has dropped sharply from 6.10 million to 5.40 million, representing an 11.46% decline in a single-day. On top of that, the MVRV (Market Value to Realized Value) ratio is now sitting comfortably above 1, suggesting that SOL is trading well above its realized cost basis. Source: Glassnode In other words, the market is flirting with overvaluation – prime conditions for a potential profit-taking cycle to kick in. Shorts are positioning themselves based on these on- chain signals. If structural demand continues to weaken, they could capitalize on the potential downside. Solana is, without a doubt, in a high-stakes gamble. The momentum is leaning bullish, as market-wide FUD is at a lull. But a full-on rally? That still feels like a stretch. Bears are still in the mix, waiting for the right signal to reverse the trend. Share Share Tweet