[{"category":{"name":"Trending News","exported_url":"trending-news"},"id":"88864ab9-946e-4bc3-be5c-a420a0294df7","updated_at":"2024-05-29T02:00:29.109+00:00","account":{"firstName":"Marigold","lastName":"Vance"},"description":"The price of Solana (SOL) witnessed a significant increase of 5% today, yet on-chain data casts doubts on its ability to overcome the $190 barrier.","sapo":"Despite such seemingly optimistic uptick, stagnant on-chain activity and concerns about inflationary changes foster the belief of SOL’s inability to exceed the landmark of $190.","title":"The underlying reasons for the increase in Solana price: Can the mark $190 be surpassed?","content":"

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The past day has witnessed a 5% increase in the price of Solana (SOL), but on-chain data suggests that there remains a long way to go before Solana manages to break through the $190 barrier.

The recent rise from $161 to $171 on May 27 in Solana’s value has fueled investors’ hope for continued growth, especially after its hit of $188.90 on May 21. Despite the stagnant activity of the network, this upward movement still becomes reality chiefly due to a proposal designed to increase yields for validators rather than burning tokens.

The proposal is called the SIMD-0096 proposal, which was approved by Solana's validators on May 27, which eliminated the 50% burn rate on priority transactions and shifted to a 0% burn rate. This modification aims to incentivize validators to prioritize network security and efficiency through engaging in arbitrage strategies that involve transaction reordering or exclusion.

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Nevertheless, analysts highlighted that this adjustment may exert a negative impact on the Solana Network as it potentially makes SOL more inflationary despite the 4.6% increase in yearly issuance. Priority fees were absent in May 2023, implying that the effective inflation rate would even revert to approximately 9.9% annually.

Meanwhile, some speculate that SOL's recent price adjustment serves as a reaction to the approval of an Ether ETF in the United States, which sparked a decline in SOL's value. There is also belief that the market has been overly focused on this development of Ether ETF and overlooked SOL's year-to-date gains of 69%, which closely mirror those of Ether with 72% over the same period.

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While the approval of the Ether ETF may have influenced SOL's recent decline to $161, it remains uncertain how long it will take for these instruments to begin trading in the U.S. Additionally, stagnant on-chain activity and concerns about inflationary changes imply that SOL is inclined to struggle to reach its previous high of $188.90 in the near future.

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The underlying reasons for the increase in Solana price: Can the mark $190 be surpassed?

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