The battle of leveraged positions on Solana: Will the $120 level hold against the bullish pressure?

Solana’s volatility continues to intensify as traders are divided between long and short positions. With SOL currently trading at $140.13 (data as of January 12, 2025), the market faces a critical scenario where every price movement amplifies the losses of leveraged traders. The question everyone is asking is simple: will the token maintain its bullish structure or succumb to selling pressure?

Endless liquidity: Circle injects capital, but uncertainty persists

Circle has proven to be a key player in providing capital for Solana. So far in 2025, the platform has minted $55 billion in USDC on Layer 1, reflecting institutional confidence in the ecosystem. Recently, they minted an additional $500 million in USDC specifically on Solana, according to reports from Onchain Lens.

However, the irony of the market is that this abundance of liquidity does not guarantee stability. In fact, it has become fuel for speculation. With so many dollars in circulation, traders are incentivized to take more aggressive positions, including highly leveraged trades. The result: greater volatility, not less.

Clash of titans: whales in conflict

The real battle is fought among the big players. Analyzing whale activity reveals a picture of extreme polarization:

A bullish whale opened long positions with 20x leverage in an attempt to force an upward breakout. However, the strategy backfired: unrealized losses reached $5.88 million, causing their total gains to collapse from $18 million to just $3 million. Such partial liquidations exert immediate pressure on key prices.

On the other side, a bearish whale is harvesting gains with an opposite strategy. Deliberately taking short positions, they have accumulated over $27.7 million in profits while gradually taking profits. This clash of opposing views defines the current market dynamics.

Risk structure: support at $120 threatened

With SOL pressing against its technical structure, the $120 level has become a critical inflection zone. The token previously failed three times to break the resistance at $150 in November, establishing an evident bearish pattern.

The danger lies in the accumulation of overexposed leveraged long positions. If the bears manage to execute a coordinated attack below $120, cascading liquidations could be devastating. Every 20x leveraged trader who gets liquidated amplifies selling pressure, creating a domino effect.

Conversely, if support holds, longs would regain confidence. But judging by the profits short sellers are making, the downward pressure seems to dominate current sentiment.

Overall outlook: a market divided by opposing bets

Solana’s landscape reflects the fundamental characteristic of mature bullish markets: highly polarized traders with radically different views. The bulls using leverage bleed real money, while the bears realize real gains.

The continuous minting of $55 billion in USDC provides the market with seemingly infinite liquidity, but it does not resolve the fundamental conflict: as long as this disparity of forces exists, SOL will remain trapped in cycles of extreme volatility. The real risk is not just to the $120 support but to the market’s sustainability itself if leverage continues to escalate unchecked.