Solana (SOL) Price: Short Squeeze Setup Could Trigger Breakout to $300

TLDR

Table of Contents

Solana (SOL) is trading above $170, down 1.4% in 24 hours, facing resistance at $180 level
DeFi ecosystem growth shows Total Value Locked increased 28% to $9.34 billion indicating strong investor confidence
Technical analysis reveals SOL closed above 50-week EMA for three consecutive weeks, historically triggering price rallies
Fibonacci extensions suggest potential targets of $300 (70% upside) and $418 if bullish momentum builds
Futures open interest remains high at $7.5 billion with negative funding rates creating potential short squeeze conditions

Solana is currently trading above $170, down 1.4% over the past 24 hours. The cryptocurrency maintains its position above key moving averages despite recent pullback.

The altcoin faces resistance at the $180 level, which was tested on May 11. SOL has since consolidated below this threshold and appears unable to establish a sustained bullish position.

Despite the consolidation, Solana has maintained a positive signal by closing above the 50-week exponential moving average for three consecutive weeks. This level has historically acted as a catalyst for price rallies.

In late 2023, SOL broke through the 50-week and 100-week EMAs before surging 515% by March 2024. The relative strength index on the weekly chart currently stands at 52.60, indicating growing buying pressure.

This technical setup mirrors past patterns where SOL broke above the 50-week EMA and rallied. Current technicals suggest SOL appears poised to retest the $300 level by late 2025.

DeFi Ecosystem Shows Strong Growth

Solana’s distributed finance ecosystem continues displaying strong growth with Total Value Locked rising 28% from April 1 to reach $9.34 billion. This increase indicates ongoing technological confidence and reduced selling pressure as investors lock tokens in smart contracts.

Low fees and high transaction volume in the Solana ecosystem attract DeFi applications. This strengthens the network beyond speculative trading activities.

The DeFi growth provides fundamental support for SOL’s long-term price outlook. The ecosystem expansion demonstrates real utility beyond trading speculation.

Using trend-based Fibonacci extensions, SOL’s potential upside could be compelling. The extension taken from recent swing lows near $95 to January highs of $295 outlines an immediate target around $300.

This represents approximately 70% upside from current levels. If SOL enters price discovery mode, bullish momentum could target the 1.618 extension suggesting SOL could reach $418.

However, failure to hold the 50-week EMA could cause SOL to retest lower support near $157. The $180 level remains the critical inflection point for near-term price movement.

Futures Market Shows High Institutional Interest

SOL futures market activity remains robust despite trading nearly 40% below its all-time high. Solana futures open interest stands at $7.5 billion, just $1 billion short of its January 19, 2025 peak of $8.5 billion.

Elevated open interest levels typically signal heightened speculative interest. This suggests traders are positioning for price volatility.

Funding rates across exchanges have turned negative, indicating a tilt toward short positions as SOL struggles to reclaim $180 resistance. While this often reflects bearish sentiment, it opens the door for a potential short squeeze.

Crypto futures analyst Byzantine General noted that current market conditions could catalyze a sharp upside move. The setup includes elevated open interest, rising aggregated volume, and relatively muted cross-exchange funding.

Kinda feels like $SOL is on its way back to 300. pic.twitter.com/YfIExffR5M
— Byzantine General (@ByzGeneral) May 27, 2025

He suggested this could lead to a breakout toward the $300 level if momentum builds. The combination of high open interest and negative funding rates creates conditions for a potential short squeeze.

However, prominent trader Carl Moon flagged a potential double top pattern on the 4-hour chart. If this pattern plays out, SOL could revisit $157 to $152 in the short term.

Current price targets include immediate resistance at $180-$185 and a bullish target of $300. Extended targets reach $418 based on Fibonacci extensions, while downside risk exists at the $157-$164 support zone.

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