Solana Faced 20% Drawdown after Failing to Break $160: What’s Next For SOL?

• Solana (SOL) price faced 20% drawdown after failing to break $160 resistance.
• Negative funding rate and historical CMF patterns suggest potential rebound.
• Price targets: possible rise to $160 if $137 resistance is broken, or continued consolidation below $137.

Solana (SOL) finds itself at a critical juncture following weeks of heightened volatility and a 20% drawdown in late August. Despite multiple failed attempts to breach the $160 resistance level, recent shifts in market behavior and key technical indicators suggest a potential rebound may be on the horizon, rekindling optimism among traders and analysts.

A pivotal factor in assessing SOL’s recovery prospects is the recent negative turn in the funding rate. This metric, which measures the cost of holding positions in the futures market, often serves as a barometer for market sentiment.

Brian Quinlivan, Lead Analyst at Santiment, notes that the increasingly negative funding rate could signal an extreme in bearish sentiment, potentially setting the stage for a price reversal.

Source: Santiment

Solana price dip could be temporary

Complementing the funding rate analysis, the Chaikin Money Flow (CMF) indicator has established a notable pattern for SOL. Historically, when the CMF dips to -10.0, Solana tends to experience a rebound within seven to ten days.

This recurring pattern suggests that recent price declines could be temporary, with the potential for increased capital inflows to drive prices higher in the near term.

Broader macroeconomic factors also play a crucial role in shaping SOL’s price trajectory. Continued growth in institutional interest and overall market participation could provide tailwinds for Solana, further bolstering the case for a potential price recovery.

Currently trading at $129, SOL has shown resilience by bouncing back from the $126 support level. For Solana to resume its upward momentum, it must decisively break through the local resistance at $137.

A successful breach of this level could pave the way for a push towards the psychologically significant $160 mark, a price point that has served as both support and resistance in previous consolidation phases.