Solana’s Negative Funding Rate: Why Panic Isn’t on the Menu (For Now)

Solana’s funding rates dip into the red—but before you dump your bags, here’s why the sky isn’t falling.

The Mechanics Behind the Madness

Negative funding rates often signal excessive short interest, but Solana’s ecosystem fundamentals remain robust—developer activity hasn’t slowed, and NFT volumes still crush most L1 competitors. This looks more like traders hedging bets than a loss of conviction.

When to Actually Worry

If SOL’s price starts mirroring the funding rate downtrend for more than 72 hours, that’s your cue to reassess. Until then? The perpetuals market is doing what it does best—overreacting while VCs cash out to buy another Maldives vacation.

Source: Glassnode

Active addresses represent long-term resiliency

Unlike the funding rate, on-chain activity appeared to be more favorable though. Long-term active addresses, for instance, have continued to grow – A sign of persistent confidence in the network from committed users and investors.

Such a trend is likely to mean a healthy system, one that can support price hikes in the long run. Such a trend also implies that the broader user base remains active, despite some traders hedging short.

Source: Token Terminal

$175 supply zone still holds for SOL

Technically, Solana’s price has been consolidating in the zone around the $175-level for the past fortnight. This zone has been a key supply zone where bears executed several sell orders, with the trading volume climbing too.

So far, SOL has retested the region in a choppy structure without a successful breakout. The prolonged consolidation, which has been on hold since 9 May, suggested that bulls and bears have been waiting for more aggressive signals to commit to either direction.

Source: TradingView

Bullish market structure still intact

Despite the fading funding rate and resistance at $175, Solana’s overall market structure has been bullish. In fact, SOL’s price action on longer timeframes hinted that the bulls remain firmly in charge.

A hike in activity from long-term investors only served to affirm this point of view.

While caution must be exercised based on short-term measures, the overall picture for SOL remains biased towards potential gains.