Solana price falls 18% in May as SEC scrutiny cuts open interest by $330M

• Open interest in SOL derivatives falls from $3.20B to $2.87B.
• Price faces resistance at 50-day EMA, $150 is key support.
• Polymarket shows 80% odds of Solana ETF approval.

Solana is under pressure as June begins, with its price down 18% over the past three weeks.

The latest trigger came on 30 May, when the US Securities and Exchange Commission (SEC) raised concerns over two proposed staking exchange-traded funds (ETFs) involving Solana and Ethereum.

The agency’s reaction sent a chill through the derivatives market, with total open interest (OI) in Solana futures dropping from $3.20 billion to $2.87 billion.

The funding rate also slipped into negative territory, indicating declining confidence among perpetual traders.

The ETFs in question were proposed by REX Shares and Osprey Funds.

While details of their structures were not fully disclosed, they aimed to provide exposure to staking-based returns through a regulated vehicle.

However, the SEC flagged “unresolved questions” around whether these funds qualify as legitimate investment companies under the Investment Company Act of 1940. The comment came via a filing attributed to Brent J. Fields, Associate Director at the SEC.

Solana faces resistance as bearish momentum builds

Solana was already showing signs of weakness before the SEC announcement.

The token faced consistent resistance near the 50-day exponential moving average (EMA), with prices unable to break past the $160–$170 range throughout the second half of May.

After hitting a high of $187.19 on 20 May, Solana reversed course and fell to $152.83 by the start of June.

On the intraday chart, SOL dropped by 3% as bears gained momentum.

Technical indicators point to further downside risk. The rejection from the 50-day EMA band has confirmed bearish control, with traders eyeing key support zones at $150, $140, and $120.

A sustained break below $150 could see SOL testing its multi-month support levels last seen in Q1 2024.

The derivatives data mirrors this sentiment. Funding rates, which reflect the cost of holding long positions in perpetual futures, turned negative at -0.0044%, down from +0.0033%.

Meanwhile, open interest—a measure of market activity—fell by over 10% within a week.

These changes show that leverage traders are unwinding their long positions amid increased regulatory uncertainty.

SEC staking ETF probe deepens regulatory uncertainty

The SEC’s concerns surrounding staking-based ETFs reflect a broader unease with crypto-native financial instruments entering traditional markets.

Although Ethereum futures ETFs have been approved in the past, no product has yet offered returns tied to staking rewards.

Solana, in particular, poses additional risks due to its more centralised validator set and history of network outages.

By raising objections now, the SEC may be signalling a tougher stance on newer ETF proposals, especially those involving yield-generating protocols.

For Solana, this creates additional headwinds, as any delay or rejection of staking ETFs could limit mainstream adoption and capital inflow.

Traders and analysts have also pointed to the lack of clarity on whether Solana is a security or commodity, a debate that has lingered since 2022.

Despite these short-term roadblocks, the longer-term sentiment appears more positive.

On prediction market platform Polymarket, odds of a Solana ETF approval have climbed to over 80%, suggesting that investors still see eventual regulatory clearance as likely.

However, the timing and scope of such an approval remain uncertain.

Solana’s June outlook hinges on key support levels

With SOL trading below its 50-day EMA and investor appetite dwindling in the derivatives space, much now depends on how the market reacts at key support levels.

A firm defence of the $150 mark could set the stage for a rebound later in the month, especially if broader crypto sentiment improves.

Conversely, failure to hold $150 may lead to further capitulation towards $140 or even $120.

While some on-chain data shows consistent activity within the Solana ecosystem, including growth in decentralised applications and daily transaction counts, price action remains largely dictated by macro and regulatory forces.

The SEC’s latest comments have injected a fresh dose of uncertainty, and for now, market participants appear to be de-risking.

As Solana enters June on a cautious note, its short-term trajectory will likely depend on two fronts—clarity from regulators and a return of speculative interest in high-beta altcoins. Until then, the path of least resistance appears to be downward.