An increase in long liquidations was observed in Solana as its price dropped below $180 on April 2nd. Data from Coinglass revealed that long liquidations for SOL reached $11 million, marking a two-week high. This scenario occurs in the cryptocurrency derivatives market when a position is forcibly closed due to insufficient funds to sustain it.

Long Liquidations in SOL

Long liquidations take place when the value of a token rapidly declines, causing investors with open positions betting on a price rise to exit their trades. Conversely, short liquidations totaled $3 million on the same day. Analysis of SOL's futures market activity indicates a consistent downtrend since the month began. The open interest in the cryptocurrency's futures, representing the total number of unsettled futures contracts, has been decreasing since April 1st.

Data from Coinglass shows that SOL's futures open interest, which stood at $2.88 billion at the start of April, has decreased by 20% since then. A drop in a token's open positions suggests that market participants are closing out their trading positions without initiating new ones. Although the funding rate on cryptocurrency exchanges remained positive, it has plummeted by nearly 90% since April 1st and is at its lowest point in 60 days. The decline in SOL's funding rate signifies a reduced demand for long positions.

Long-Term Perspective on SOL

This situation might indicate that long-term investors are exiting their positions predominantly for profit. The departure of long investors in this manner could signal high market volatility or a weakening bullish momentum. As a result, buying pressure diminishes, leading to a decline in the asset's price.

The ongoing increase in SOL's downtrend corresponds with a reduction in the cryptocurrency's social activity. Data from Santiment reveals a 50% decrease in SOL's social dominance and a 57% decrease in social volume over the past two weeks. A drop in a token's social activity implies reduced engagement on social media platforms, typically occurring when bullish sentiment starts to fade.