Solana's Negative Funding Rate Hints at Bearish Pressure Despite a 95% Rally Since April

Solana (SOL) is being put to the test as it is now the only top 10 cryptocurrency, other than stablecoins, that has a negative funding rate.

Solana (SOL) is testing the bears and bulls at a crucial juncture. The crypto is now the only top 10 cryptocurrency, excluding stablecoins, that is in a negative funding rate, noted Glassnode.

According to the analytical platform, Solana’s funding rate is currently at -0.0002%. While it is a small number, the figure could herald reversals in the market.

As one of the most widely used crypto derivatives trading platforms, funding rates are charged on exchanges to adjust any difference between the futures and spot prices. A positive funding rate means traders who hold long positions pay a small fee to traders who hold short positions, and vice versa.

If investors anticipate the price to rise further, they will pay a premium for futures contracts. But if they expect the price to drop, they will sell short-term futures contracts and bear the funding rate.

Solana price testing $180 again

The token value has seen a sharp rise in recent times. In fact, SOL has added over 95% since the start of April.

However, as a result of the rally, the crypto has now hit a key resistance area. On Thursday, at the time of writing, the price is holding just below $180.

This level of resistance has slowed the bulls’ progress on several occasions. Moreover, if we zoom out further, we can see that $180 is also the 50/100-day exponential moving averages (EMAs).

These EMAs have been offering support to Solana in the present uptrend. Meanwhile, the relative strength index (RSI) is approaching overbought territory, which could slow down the bulls a bit more.