Solana Faces Liquidity Reset Amidst Significant Liquidation Risks
Solana's 30-day average realized profit-to-loss ratio has remained below 1 since mid-November, signaling that realized losses have outpaced profits and liquidity has dropped to levels typical of a bear market. Analysts describe this situation as a full liquidity reset, a pattern historically associated with market bottoming phases. If this trend recurs, a potential market reignition could happen in about four weeks, around early January.
There is an estimated $500 million in leveraged long positions at risk of liquidation if Solana's price declines to $129, approximately 5.5% below the current price near $137. Near-term market conditions continue to be volatile and uncertain, driven by realized losses fueling sell-offs, decreasing futures open interest, market-makers pulling back, and liquidity becoming fragmented across pools.
Despite these challenges, structural bullish signals persist. Notably, there have been ongoing outflows of Solana from exchanges and considerable spot Solana ETF inflows this week totaling $17.72 million, closely matching last week's inflows of $20.30 million. In the broader crypto market context, $432 million in liquidations took place over the past 24 hours. During this period, Solana's price rose by 3.2%, though $15.6 million worth of Solana positions were liquidated, ranking third after Bitcoin and Ethereum.
Analysts provide insight into the reset's implications. Wenny Cai of SynFutures explains that the reset is primarily driven by realized losses prompting selling. Ryan Lee of BitGet adds that such a reset might clear excess leverage and pave the way for renewed institutional interest and inflows into Solana.
