Solana’s 25% Rally Above $90: Regulatory Relief, Short Squeeze and Key Risks

Solana’s August 2026 surge was more than a single-news reaction. The SEC’s proposed crypto framework improved risk appetite, SOL broke through several technical barriers, and short sellers were forced to buy back positions as momentum accelerated. The result was a roughly 25% weekly gain above $90—but not yet confirmation that SOL had returned to its previous-cycle trend. The token remained well below its January 2025 peak near $293–$294. 314

What drove Solana’s breakout?

The initial catalyst was regulatory sentiment. Reports linked the rally to the SEC’s proposed rules for crypto assets, including a proposed exemption allowing crypto businesses to offer up to $5 million in unregistered securities over four years and up to $75 million over 12 months. The proposal was presented as a framework for public comment, not as final regulation. 67

That shift in perceived regulatory risk arrived alongside other bullish forces:

• A broader high-beta crypto rally increased demand for assets such as SOL. 224
• Solana’s faster slot-time activation or upgrade strengthened the network-related narrative around adoption and performance. 1824
• Improving SOL-linked ETF flows provided evidence of renewed demand through regulated investment products. 142122
• A technical breakout carried SOL above the $78 area and then through the region around its 200-day moving average near $89–$90. 6914

The combination mattered. News improved sentiment, the breakout attracted momentum buyers, and leveraged traders helped turn an advance into a rapid repricing.

How the short squeeze amplified the move

Once SOL moved through prior resistance and major moving averages, short sellers faced rising losses. Traders using leverage can be forced to close bearish positions when collateral becomes insufficient; those buybacks add demand to an already rising market. That is the basic mechanism behind the short squeeze described in contemporaneous market coverage. 2314

One report cited approximately $4.6 billion in short liquidations. That figure is repeated in some market summaries, but it is not independently corroborated by the other material available here, so it should be treated as a reported estimate rather than a settled measurement. 211

The price action itself shows how quickly conditions changed. SOL advanced from roughly $76 into the low-to-mid $90s, briefly reaching above $100 in some reports before returning near $94. One account recorded an intraday range of approximately $87.72 to $102.74. 71841

This distinction is important: a liquidation-driven rally can produce impressive price gains without proving that equivalent buying has arrived from long-term spot investors. One analysis specifically argued that derivatives activity, rather than an equally strong wave of spot buying, was shaping the breakout. 41

Volume and sentiment: bullish, but increasingly crowded

Trading activity and buying pressure rose as SOL cleared resistance, although the available reports do not establish that spot-market volume grew in proportion to the price move. That makes the composition of demand worth monitoring: continued ETF inflows and sustained spot buying would provide stronger confirmation than forced derivative closures alone. 141841

Sentiment nevertheless shifted sharply. The Crypto Fear & Greed Index was reported at 76, a bullish reading that also suggests risk appetite had become crowded. 2 Crowded positioning can support further upside while prices are rising, but it can also make reversals faster when buyers stop chasing.

The technical picture after the rally

SOL’s move above the 20-day, 50-day, 100-day and 200-day moving averages marked a meaningful change from the earlier consolidation. The area around $89–$90 therefore became a crucial test: former resistance needed to act as support if the breakout was to develop into a sustained recovery. 14

Momentum indicators were much less comfortable than the price chart. Several reports placed the 14-day RSI around 82–84, well above the commonly used 70 overbought threshold. 12143436

An overbought RSI does not guarantee an immediate decline. It does show that price has risen much faster than its recent average, increasing the chance of consolidation, profit-taking or a sharp mean-reversion move before another advance. 34

Not all technical snapshots agreed. An Investing.com reading on August 23 showed RSI at 56.011, while other reports recorded readings above 81. The difference likely reflects different timestamps, exchanges or calculation windows. The reliable conclusion is not a single exact RSI value, but that SOL had become highly volatile and technically extended during the breakout. 3843

SOL price levels to watch

The main levels identified across the available analyses were:

• $95–$100 resistance: This was the immediate supply zone, with $98 and the psychological $100 mark repeatedly identified as near-term hurdles. 121441
• $87–$90 support: This area includes the breakout region and the approximate 200-day moving-average zone. Holding it would strengthen the case that former resistance has become support. 3614
• $83–$85 support: A deeper retracement zone if SOL loses the upper support band. 1841
• $76–$78 secondary support: The earlier breakout base and moving-average cluster remain relevant if selling pressure becomes more persistent. 123435

A sustained daily close above $95–$100, accompanied by continued ETF inflows and broad crypto strength, could put $102–$105 in focus. 67 A failure at that resistance would instead make a retest of $87–$90 more plausible, with $83–$85 the next important downside area. 11232

Are institutions really returning through SOL ETFs?

The ETF data was encouraging, but it needs to be read in context. U.S.-listed spot Solana ETFs reportedly attracted $14.58 million in a single day around August 20–21, described as the strongest daily inflow since late July. Earlier reports recorded $8.8 million on August 10, cumulative inflows above $1.15 billion and total net assets near $900 million. 1421222425

Other reporting cited approximately $600 million in assets for a Bitwise Solana Staking ETF and about $125 million for a Fidelity Solana fund as of late July. 17

These figures support the view that regulated access to SOL had become a meaningful source of demand. They do not, by themselves, prove that institutional buying was accelerating without interruption. July’s net ETF inflow was reported at only $14.6 million after June outflows, and other coverage noted periods of weak or zero flows. 8192327

The strongest interpretation is therefore measured: ETF flows improved during the rally and helped the bullish narrative, but they were one component of a market move also driven by derivatives, technical momentum and broader crypto risk appetite.

What the daily-active-user crossover suggests

Analysts also pointed to a crossover between Solana’s 30-day and 50-day daily-active-user moving averages. In general, that pattern means the shorter-term activity trend has moved above the longer-term trend, which can be consistent with improving network use or renewed adoption. 81923

The available evidence does not provide a reliable, quantified 2025 comparison or establish that the crossover caused the price rally. It is better treated as supporting on-chain evidence than as a standalone trading signal. The crossover becomes more meaningful if it is followed by sustained activity, stronger transaction-related demand and price holding above the breakout zone.

Upside targets and the $150 question

The immediate bullish case depends on SOL converting $95–$100 into support. If that happens while ETF inflows, network-upgrade expectations and broader market momentum remain positive, $102–$105 becomes a logical next area to watch. 67

Prediction-market data cited a 55.5% chance of SOL reaching $100 during the referenced August period, while another market-oriented analysis placed the chance of SOL reclaiming $150 this year at only 8%. 48

Those probabilities are sentiment indicators, not investment forecasts. The low $150 reading is consistent with the technical distance SOL still had to cover: it remained far below its approximately $293 January 2025 high, and it had to clear several resistance zones before a move toward $150 could become technically credible. 814

The main risk: momentum outruns demand

The central caution is that the rally may have moved faster than its underlying demand. A short squeeze can lift price rapidly, but once forced buying fades, the market needs fresh spot demand to defend the new levels. Overbought momentum, heavy resistance near $95–$100 and conflicting readings on derivatives versus spot activity all argue against treating the breakout as conclusive. 143241

One technical model assigned a 60–65% probability to a near-term bearish pullback if SOL failed to reclaim and hold the $95.08 pivot. That is a single analyst model, not market consensus, but its proposed path—first toward roughly $87.41 and then toward the $80–$82 area if support failed—illustrates the risk of a fast retracement. 32

The practical test is straightforward: holding $87–$90 would preserve the breakout structure, while losing that zone would shift attention toward $83–$85 and potentially the $76–$78 base. Until SOL clears $95–$100 with durable demand, the August surge is best described as a powerful momentum recovery—not yet a confirmed return to its former bull-market high.