Solana’s SOL Futures Rack Up $1B in Record Bullish Bets

The present bias towards long positions means potential for a long squeeze, where investors who hold long positions feel the need to sell into a falling market to cut their losses.

AccessTimeIconFeb 15, 2024 at 9:50 a.m. UTC
Updated Mar 8, 2024 at 9:36 p.m. UTC
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  • SOL tokens are up 15% in the past two weeks and are among the best-performing major tokens.
  • Levered bullish bets make a bulk of futures open interest for SOL, data shows, but may create a long squeeze event.

Bets on futures tracking Solana’s SOL have risen to a lifetime peak of $1.7 billion in the past week, with bulls leading the charge.

Notional open interest – or the dollar value locked in the number of unsettled futures contracts – has risen over $700 million since the start of February to $1.7 billion, with $400 million added since Feb.8. This exceeds the $1.4 billion figure set in late December, the previous record when the ecosystem saw a meme coin-led frenzy.

Data from tracking service Coinalyze shows over 63% of positions are long or betting on higher prices – implying upward of $1 billion in bullish futures bets.

Increasing open interest represents new or additional money coming into the market amid the price rally.

Leverage, however, is a double-edged sword. It magnifies both profits and losses and is known to inject volatility into the market. The use of high amounts of leverage can often lead to a sudden and rapid movement of any token, as a price rise or fall may trigger a liquidation event.

The present bias towards long positions means potential for a long squeeze, where investors who hold long positions feel the need to sell into a falling market to cut their losses, thereby creating a liquidation cascade. A similar build-up in late December peaked at $1.37 billion – preceding a drop from $120 to $83, or 30%, at the time.

That said, SOL’s open interest of $1.7 billion still accounts for less than 5% of its market capitalization of $50.55 billion, which means volatility in futures may not have a long-lasting impact on the spot price.

SOL prices are up 15% in the past two weeks, data shows, leading growth among other major tokens.

(Omkar Godbole contributed to this story.)


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Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.

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