Daily Burn Rate Imminent to Soar 14x! August 18th's Warning to Change Solana's Fate!

▲ Solana (SOL) ©

Despite unprecedented network performance improvements, Solana (SOL) has fallen below key moving averages, dropping to the $72 level. Market attention is now focused on whether a governance proposal to increase the burn rate by 14 times will be the key to a reversal.

According to investment media TradingNews on August 7th (local time), Solana is trading at $72.64, down 2.07% from 24 hours ago. Unlike major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH), which saw gains due to expectations of a Federal Reserve interest rate cut following weak employment figures, Solana has continued its solo decline, recording a drop of approximately 10% over the past month. This represents a 75.3% decrease from its peak of $293.

From a technical analysis perspective, a strong bearish bias is evident. The SOL price has fallen below all its moving averages: the 20-day MA at $75.81, the 50-day MA at $76.27, the 100-day MA at $79.72, and the 200-day MA at $92.45. The Relative Strength Index (RSI) is at 43.05, remaining in bearish territory, and the Moving Average Convergence Divergence (MACD) is also below its signal line, indicating slowing momentum. Experts warn that if the $70.62 level breaks, there is a risk of further decline to the $60-$66 range.

The divergence between technical performance and token price is also deepening. Network performance has significantly improved with the introduction of Firedancer, increasing transaction throughput to over 600,000 transactions per second, and the Alpenglow upgrade, which reduces finalization time to 150 milliseconds. However, Solana spot ETF inflows in July were only $14.6 million, and in August, they turned into outflows, indicating a significant weakening of institutional investor buying, which is identified as the main reason preventing price increases.

The only potential catalyst for a reversal currently attracting market attention is governance proposal SGP-0003. This proposal aims to restructure the fee system based on resource usage, expanding the daily token burn amount by approximately 14 times, from the current 650 SOL to a maximum of 9,000 SOL. This could lead to the annual burning of approximately 3.285 million SOL, creating strong deflationary pressure. It also includes a plan to double the rate of currency supply reduction, accelerating the achievement of the annual inflation floor to 2029.

For the proposal to pass, it needs to secure "yes" votes from validators representing 15% of the total staked amount, or 65.16 million SOL, by August 18th, followed by a two-thirds majority "yes" vote in the overall ballot. Currently, approximately 63 million SOL "yes" votes have been secured, leaving about 3 million SOL short of the passing threshold. The outcome of the proposal is expected to determine whether Solana's price will attempt to reclaim the $90 level, surpassing $79.72, or if it will experience a further decline to the $60 level.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*