SOL Price Analysis: Short Squeeze Potential and Key Levels

• Short Squeeze Potential: Extreme short positions could trigger a sudden upward move in SOL.
• Key Levels: Resistance lies at $90–$100, while support holds near $75–$78.
• Network Signals: Rising wallet creation suggests accumulation despite price weakness.

Solana’s SOL has been navigating choppy waters recently, trading near $83.69 after dipping to $79.82 earlier. The coin gained 1.5% in the last 24 hours, with around $3.25 billion in trading volume and a market cap close to $47.57 billion. Despite the bounce, the bigger trend remains bearish. Traders are watching closely for signs of a short squeeze that could push SOL higher. February may prove critical for price action.

SOL remains below both the 50-day and 100-day moving averages, currently at $106.66 and $124.18. Both averages slope downward, highlighting persistent selling pressure. Any recovery toward $90 to $100 could face strong resistance, and breaking above the 50-day average would be needed for a clear shift in trend direction. On the downside, a fall below $78 could bring the coin down to $75, a key psychological level.

The coin appears to be forming a base, but confirmation has not yet occurred. Price consolidation at these levels may allow buyers to accumulate. However, with momentum indicators still bearish, caution is warranted. The True Strength Index shows the main line at -33 and the signal line at -35. These values indicate selling momentum, though the lines are flattening, suggesting pressure may be easing slightly.

SOL’s short-term price action has drawn attention to the derivatives market. Funding rates have dropped sharply into negative territory, reflecting a high number of traders betting against SOL. Extreme short positioning can create conditions for a short squeeze, where sudden upward movement forces shorts to close, driving additional buying. Previous funding dips have coincided with local price bottoms, hinting that a similar pattern could play out.

For a short squeeze to gain traction, SOL would need a breakout above $90 with strong trading volume. Open interest and overall volume must confirm the move to increase reliability. If the rally continues, a push toward $100 becomes plausible, fueled by forced short covering and renewed buying interest. Traders should monitor volume spikes and on-chain activity closely for early signs of this setup.

Interestingly, Solana’s network activity shows a positive divergence from price. New wallet creation continues rising even as price falls. Historically, this type of adoption-price split often appears during accumulation phases. Reduced social dominance since September further indicates short-term traders have exited. Lower hype can sometimes precede quieter accumulation by long-term holders, setting the stage for potential upward moves.

While the broader trend remains under pressure, these signals hint that selling may be slowing. Combined with negative funding and rising network adoption, SOL could see a short-term rally if bullish catalysts emerge. Investors and traders will need to weigh technical resistance, derivatives positioning, and on-chain activity before making decisive moves.