Daily Burn Amount Set to Skyrocket 14x! August 18th 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 TradingNews, an investment media outlet, on August 7 (local time), Solana is trading at $72.64, down 2.07% from 24 hours ago. Unlike major cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH), which have shown an upward trend due to expectations of a Federal Reserve interest rate cut following sluggish employment indicators, Solana has continued its decline alone, 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 moving average at $75.81, the 50-day moving average at $76.27, the 100-day moving average at $79.72, and the 200-day moving average 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 of a risk of further decline to the $60-$66 range if the $70.62 support level breaks.

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

The only reversal catalyst the market is currently focusing on is governance proposal SGP-0003. This proposal aims to restructure the fee system based on resource usage, thereby increasing the daily token burn amount by approximately 14 times, from the existing 650 SOL to a maximum of 9,000 SOL. Consequently, approximately 3.285 million SOL could be burned annually, 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 validator votes amounting to 65.16 million SOL, which is 15% of the total staked amount, by August 18, and then receive more than two-thirds of the total votes. Currently, approximately 63 million SOL in favor have been secured, leaving only about 3 million SOL until the passing threshold. Depending on whether the proposal passes, Solana's price is expected to either attempt to reclaim the $90 level, surpassing $79.72, or face a further decline to the $60 level.

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