Prominent altcoin Solana (SOL) was one of many cryptocurrencies to recently catch investors’ attention, gaining by 7.21% in the last week according to data from CoinMarketCap. Amidst this rally, Solana reclaimed the $140 price zone, a price point last seen in June. Interestingly, on-chain analytics company Santiment has now shared some developments in the Solana market that may signal a sustained bullish momentum.
Low Trading Activity Accompanies Solana Price Gain, But No Problem: Santiment
On Saturday, Santiment reported that certain assets have experienced a rise in open interest as a result of the recent crypto market rally. Notably, the open interest in Bitcoin, the leading cryptocurrency, reached approximately $12.2 billion with the Ethereum (ETH) market recording a significant value of $5.36 billion.
Generally, open interest refers to the total number of outstanding derivatives contracts for an asset that has not been settled, expired, or closed. It is a key indicator of market sentiment and trading activity. An increase in open interest in an asset often suggests more leveraged trades are being opened with more investors speculating on the future movements of the said asset. If rising open interest occurs in tandem with rising prices as seen in Bitcoin and Ethereum, it can indicate confidence in sustained profitability.
However, despite significant price gains in the last week, Solana recorded a low open interest value of $1.76 billion. In contrast to popular notions, Santiment has postulated this development to be a bullish signal for the altcoin. This is because a massive level of leveraged trading/open interest can likely lead to increased volatility with the potential for rapid price pullbacks. Therefore, the reduced interest around Solana could allow for more steady accumulation by investors which could drive significant price gains in the long term.
Bearish Sentiment Seeps Into SOL Market
In other news, data from Coinglass shows that the Solana Long/Short ratio currently stands at 0.9924 indicating traders have a slight bearish sentiment towards the altcoin. As the name implies, the Long/Short ratio is calculated by dividing the total number of long positions on an asset by its short positions. A value above 1 indicates a bullish sentiment while a value below 1 as in this case represents a bearish market sentiment.
At the time of writing, Solana trades at $137 following a decline of 1.65% in the past 24 hours and a 3.19% drop in the thirty days. Conversely, the asset’s daily trading volume is down by 33. 85% and valued at $1.06 billion.