Solana liquidity retreats to bear-market territory… USD 500 million liquidation concern if price falls an additional 5.5%%

Solana's liquidity has recently contracted sharply, retreating to bear-market levels, and analysis suggests that if the price falls just an additional 5.5%, long positions worth USD 500 million could be liquidated.

On the 10th (local time), Decrypt reported that, based on Glassnode data, Solana's 30-day average realized profit-and-loss ratio has remained below 1 since mid-November. This indicates that realized losses in the market are larger than gains, suggesting that perceived liquidity has reverted to bear-market territory. On-chain analytics firm Altcoin Vector said, "Solana has entered a full liquidity reset phase," explaining that "in past cases this signaled a bottom formation and the start of a new liquidity cycle." It added that if the pattern repeats, the adjustment could continue into early January.

Weni Chai, Chief Operating Officer of SynFutures, said, "Selling pressure from increased realized losses, reductions in derivatives open interest, market maker retreat, and liquidity dispersion across pools are driving the reset." He assessed that while Solana retains upside potential over the medium to long term, the short-term market remains vulnerable to volatility and shocks.

However, on-chain accumulation and ETF inflows are cited as factors providing downside support. Exchange-held Solana balances have continued to decrease, reducing sell-side available supply, and spot Solana ETFs saw USD 17.72 million inflows this week, continuing a trend similar to last week's USD 20.3 million. Ryan Lee, lead analyst at Bitget, evaluated that "this is creating a strategically accumulative environment for long-term ecosystem recovery and innovation."

Nevertheless, the leverage market remains unstable. According to CoinGlass, USD 432 million worth of liquidations occurred over 24 hours, of which Solana accounted for USD 15.6 million, the third-largest liquidation size after Bitcoin and Ethereum. Solana's price sits around USD 137, up 3.2% on a 24-hour basis, but if it falls 5.5% to USD 129, long positions worth about USD 500 million would enter the liquidation zone. Conversely, a roughly 3% rise could trigger USD 110 million of short covering, adding momentum to a short-term rebound.

Lee said, "If a downside test of USD 129 occurs and large-scale long liquidations happen, it would be a healthy adjustment that flushes out excessive leverage," adding, "It could pave the way for future institutional inflows and a firmer rebound base."