SOL Supply Squeeze Supports the $120 Bottom, but Is it enough?

Solana’s (SOLThe crypto-asset is hovering above $120, indicating a strong supply side shift. However, market participation must be increased to convert this structural advantage to upward momentum.

The key takeaways

• Binance received $2.12 billion USDC while SOL holders exited with $1.11 trillion, creating a bullish chart around $120.

• SOL volume dropped 3%, while BTC and ETH jumped 43% and 24 % respectively. This indicates a lack of trader activity despite improved spot mechanics.

• According to this, the relative unrealized profit has retreated back to its October 2023 levels.

The $120 ceiling is supported by stablecoin supply and inflows.

Solana saw a dramatic liquidity divergence last week on Binance. USDC was (USDCInflows of ) soared to 2,12 billion dollars, while SOL withdrawals exceeded 1,11 billion dollars. CryptoQuant data indicated It is important to note that the dynamic of this price stabilization above $120 has become crucial in defending key support levels.

In most cases, large stablecoin flows are due to a lack of liquidity on the buy side from institutional or whale entities. Native tokens outflows also reduce the exchange side sell pressure and reinforce the notion of a supply crunch.

USDt) is a currency.USDT() witnessed a $450-million outflow, which further highlighted a move toward USDC capital deployment within Solana ecologies. This trend has historically been aligned to constructive market behaviour.

Even though the supply is tightening, demand for products must continue to grow. If spot buyers are not active, the supply-side may be unable to support a broader direction.

Glassnode’s heat map of cost-basis distribution shows that a recent large group of buyers bought 17.8 millions SOL for $142, and 16 million SOLs at $135.

The clusters are similar to the onchain resistance and support zones.

• Strong support is generated by large clusters of stocks below the price, because many investors are in profit or close to breakeven. They have a strong incentive to defend.

• Potential resistance is created by large clusters of stocks above the price, because trapped liquid may cause a sale.

SOL currently needs to recover $135 for recent buyers and $142 to serve as solid fundamental support levels. 

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The SOL PnL is reset, and the futures market activity stops.

Onchain activity shows accumulation while derivatives indicate a cautious climate. SOL futures volume slipped 3%, even as Bitcoin (BTCEtherETH() saw significant increases of 43 % and 24 %).

The SOL imbalance indicated that SOL trader activity was unusually low, as compared to capital entering the ecosystem via stablecoins.

SOL was trading at around $20 in October 2023, and the relative profit unrealized has fallen to that level. Profitability resets can indicate that excess speculative trading has ended, and the market is now in a zone of attractive reaccumulation.

Net Realized Profit/Loss also printed heavy negative readings in November, mirroring the deep realized losses seen during the February–April 2025 bottom-range formation. Such patterns are known to precede more robust recovery cycles. Traders would have to re-enter the market to transform their position into upward momentum.

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This article contains no investment recommendations or advice. Risk is inherent in every investment decision and trade. The reader should always do research prior to making a final decision.