Solana, Exchange Net Outflow Surges 356%... Is a 21% Crash Coming?

▲ Solana (SOL)

Solana (SOL) faces a 21% downside risk due to a double-top pattern, but large volumes flowing out of exchanges and on-chain buying zones are creating a structure that defends against selling pressure. While price charts show bearish signals, exchange net outflows and holder cost basis distribution suggest that a short-term collapse is not an easy prospect.

BeInCrypto reported on May 14 (local time) that Solana is trading at $91.22, and a 21% decline could open up according to a double-top pattern if the $76.66 neckline clearly breaks. However, it noted that exchange net outflows have surged by 356% since May 2, and a large cost basis zone has formed between $85 and $89, indicating a direct confrontation between selling pressure and buying defense lines.

On Solana's daily chart, two peaks were formed at $97.66 in late March and $98.35 on May 12. Between these two peaks, the price remained in a narrow range, and buying volume significantly slowed down. BeInCrypto explained that this trend is typical when a top pattern forms amidst weakening buying conviction.

For the bearish scenario to materialize, the $76.66 neckline must first be broken. However, between the current price and the neckline, there are multiple layers of strong cost basis defense lines. According to Glassnode's cost basis distribution data, the largest buying zone is between $85.66 and $86.22, where 13,734,525 SOL were purchased. Additionally, 8,804,899 SOL are accumulated in the $88.49-$89.07 range, which could serve as the first defense line.

Exchange flows are also showing different signals compared to the bearish chart. In April, Solana exchange inflows were dominant, but since May 2, the net position change has sharply turned negative. On May 2, Solana's exchange net outflow was 501,807 SOL, but by May 13, it had expanded to a net outflow of 2,286,298 SOL. This represents a 356% increase in exchange net outflow in just two weeks.

Such a large net outflow is interpreted as an accumulation signal. When holders withdraw Solana from exchanges to self-custody, the potential selling pressure decreases, and the speed at which a technical bearish pattern leads to an actual collapse can be slowed down. Especially given that the net outflow coincided with the rally towards the second peak around $98, it can be interpreted that buyers stepped in to defend the price even as a bearish pattern was forming.

Currently, Solana is trading above the 20-day Exponential Moving Average (EMA) of $89.54 and the 50-day EMA of $88.13. These two moving averages overlap with the $88.49-$89.07 cost basis zone, acting as the primary short-term support. If the daily candle closes below the 50-day EMA, the Fibonacci 0.618 level at $84.96 would be exposed. This level, combined with the largest cost basis zone of $85.66-$86.22, is presented as the last key defense line before the neckline.

If even this zone breaks, Solana could test the Fibonacci 0.786 retracement level at $81.31 and then the $76.66 neckline. If the neckline breaks, the next downside targets are $63.25, with a deeper bottom at $60.23. Conversely, to weaken the bearish outlook, Solana must reclaim $93.25, and a daily close above $98.37 would invalidate the double-top pattern. The Solana market is currently in a decisive phase, centered around defending the support near $88.13 and the potential recovery of $93.25.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*