SOL's short-term decline: Why is capital still flowing in?

SOL has fallen below the $120 mark in the past 24 hours, currently at $119.87, down 5.84%. This decline may seem significant, but when viewed over a longer timeframe, an interesting phenomenon emerges: while BTC and ETH funds are flowing out substantially, SOL is actually attracting capital. What exactly is happening behind this?

Short-term technical pressure

According to the latest data, SOL’s technical indicators indeed show short-term pressure. From the 4-hour K-line, the KDJ indicator has formed a death cross, and the MACD histogram remains negative, indicating strong bearish momentum. The 7-day decline has reached 15.40%, suggesting this is not just a single-day fluctuation but a sustained downtrend.

Looking at technical support levels, analysis indicates that $125.0 is the nearest major support, while $131.0 is a resistance level. The current price of $119.87 has already broken through the support, implying that short-term pressure may continue.

Capital flow shows a split

Here’s a detail worth noting:

While BTC and ETH are experiencing massive outflows, SOL is attracting capital against the trend. The 7-day net inflow of $110.3 million is especially noteworthy, indicating that institutional investors’ interest in SOL remains strong.

Ecosystem fundamentals remain solid

Beyond capital flows, SOL’s ecosystem development continues to advance. According to the latest news, Solana’s RWA (Real-World Asset) ecosystem TVL has reached $112 million, hitting a new all-time high. ONDO, as a major liquidity provider in this ecosystem, now supports over 200 tokenized stocks for 24/7 on-chain trading. This signifies that Wall Street assets are gradually moving onto the blockchain.

Additionally, the Solana Foundation’s partnership with Hanwha Asset Management is also driving ecosystem expansion. The memorandum of understanding involves developing tools and education, launching SOL-based exchange-traded products, and publishing custody guidelines. This is an institutional-level cooperation, indicating that SOL is seeking recognition from traditional finance.

Market sentiment and whale movements

It’s worth noting that a large on-chain whale, “Air Force Commander,” recently opened a $15.86 million SOL short position, which is clearly a bearish signal. However, this also reflects the trading activity around SOL—big whales are willing to place large bets here. Such opposing forces often lead to increased market volatility.

In terms of market cap, SOL is currently ranked 7th, with a market cap of $6.837 billion, accounting for 2.34% of the entire crypto market. Its 24-hour trading volume is $315 million, up 56.29% from the previous day, indicating that despite the price decline, trading activity has actually increased.

Personal opinion

In the short term, SOL is indeed facing technical pressure, and the effectiveness of the $125 support level needs further observation. However, from a capital and ecosystem perspective, this decline appears more like a short-term market correction rather than a deterioration of fundamentals. Especially given the outflows from BTC and ETH, SOL’s ability to attract capital itself demonstrates market confidence.

Summary

SOL’s decline is a fact, but the background is complex. Short-term technical pressure is real, but the long-term fundamentals—capital inflows, ecosystem development, institutional cooperation—remain robust. For short-term traders, monitoring whether the $125 support can hold is key; for long-term investors, this correction might even present an opportunity. The crucial point is to distinguish between short-term volatility and long-term trends, rather than being scared off by a single-day drop.