Is Solana entering a new phase with institutional investors' capital inflow? Breakout scenarios seen from technical analysis

Key Points

• Solana-related ETFs recorded over $11 million in weekly inflows, surpassing the combined ETF inflow amounts of BTC and ETH.
• An analysis points to about $59 of upside potential from a descending wedge pattern, but confirmation of a breakout is crucial.
• In the short term, a range-bound market between $120 and $130 is expected to continue, with the key being at which level a breakout occurs.

Institutional Demand Supporting Solana

Capital inflows into Solana suggest a market turning point. The net inflow of $11.05 million into Solana-based index ETFs over the past 7 days indicates more than short-term speculative demand; it reflects sustained buying by institutional investors. The fact that during the same period, the total inflow into Bitcoin and Ethereum-related ETFs was surpassed by Solana alone clearly shows where market participants’ interest is focused.

Such institutional capital inflows typically do not lead to immediate dramatic price surges but often serve as a stabilizing step. The inflow of this magnitude while Solana is trading near the lower end of last month’s range is significant. Market observers are closely watching ETF data as an indicator of long-term capital flow trends.

Is the Compression Pattern a Sign of Major Price Movements?

The 8-hour chart of SOL/USDT prominently features a descending wedge formation. This pattern, formed between October’s high of $235–$240 and a low of $120–$122, indicates that the price continues to approach the wedge’s apex. A descending wedge generally signifies a process where selling pressure gradually diminishes toward the end of a downtrend. Despite Solana being in a bearish trend since October, the formation of such a pattern suggests market dynamics may be shifting.

Currently, SOL is trading within a $126–$128 range. This level indicates that there are still opportunities to build positions at lower prices. Based on wedge theory, an upside potential of about $59 is identified, pointing to a target of around $185–$190. However, for this prediction to hold, a clear breakout from the pattern accompanied by increased trading volume is essential.

Divergence Indicated by Momentum Indicators

The 4-hour momentum analysis reveals an interesting development. During periods when the price makes new lows, the momentum indicator shows higher highs, indicating a bullish divergence. This is a key signal suggesting that selling momentum is gradually waning.

When such divergences are combined with compression patterns, they often serve as early warning signs of a trend reversal. However, traders typically wait for confirmation through a decisive breakout of trendlines and increased volume. To improve predictive accuracy, it’s important to wait for multiple signals to converge.

Clear Level Setting as a Basis for Short-term Trading Decisions

Currently, Solana’s price is moving within a range of $120–$130, around $124.75. On the 4-hour chart, the RSI is near the neutral zone of around 50, and the MACD remains in positive territory but shows signs of weakening in the histogram.

These indicators suggest that Solana is not experiencing a full trend reversal but is in a temporary momentum adjustment phase. Practically, the following levels are critical:

Support Levels: $123.50–$124.00 (recent), $120.00–$121.00 (strong support)
Resistance Levels: $127.50–$130.00 (recent)

A clear daily close above $130.00 would activate a short-term bullish scenario. Conversely, a close below $120.00 would significantly alter the market structure and open the possibility for lower targets. Until then, a range-bound market remains the main scenario.

Important Note: When approaching these levels, closely monitor volume changes, as they are crucial for the accuracy of predictions.