Solana (SOL) prices rose on August 30 as traders speculated on what appeared to be a release of a key but mysterious feature later this week.
The SOL / USD exchange rate rose to a new high of $ 103.06 after an intraday rally of 9.35%. The bullish move came days after Solana entered “Ignition” on her official media identifiers. However, the team provided small details about the tool, leading the community to guess that it would be about burning SOL tokens.
The speculation arose mainly due to the Ignition teaser video, which featured a purple flamed lighter.
– #A_freak_show_to_freaks (@JustDafong) August 27, 2021
Ignition might not be a SOL token burn event
As a public blockchain, Solana relies on SOL to help with two main tasks: Staking and Transaction Fee. The protocol burns a portion of the transaction fees it charges to keep SOL’s supply limited in the face of its issuance of 500,000,000 SOLs.
However, Solana also creates new tokens based on a “disinflationary inflation schedule, “where SOL’s issuance rate periodically decreases after starting at its highest value. Meanwhile, Solana claims that the supply would eventually stabilize at a” predetermined long-term inflation rate. “
But if Ignition is a token burning event, it shouldn’t deserve a dedicated landing page on Solana’s official website. This is mainly due to the previous SOL burn events that he did not see specialized teasers from Solana’s team.
Additionally, the Ignition teaser comes with a caption that reads, “The sky’s the limit. What will you release?”, With a period from August 31 to October 8, underscoring that it could be more of an event for decentralized app developers. or not. – fungible token creators (NFT), and minus one episode of token burning.
But overall, traders seem to have found Ignition a catalyst in keeping their SOL offerings higher. On the day of the announcement, which was Friday of last week, the SOL / USD exchange rate was up 17.62%. The next day, the pair was up another 9.2%.
Nonetheless, the rally slowed on Sunday just before hitting the $ 100 mark, dropping more than 1.5%. But it resumed the upside heading into the new week, claiming $ 100 as top digital assets including Bitcoin (BTC) and Ether (ETH) fell.
SOL then fell back below $ 100 due to profit-taking sentiment.
Overvaluation risks persist
Solana prices began to rally in the wake of a general rally in cryptocurrencies after Bitcoin bottomed below $ 30,000 on July 20. Later, SOL / USD took additional bullish momentum in a flurry of bullish fundamentals, including digital asset manager Osprey Fund. decision to launch a fund dedicated to Solana for institutional investors.
Related: Solana hits record high with SOL price rising more than 218% in six weeks. What’s behind the rally?
Last week, the Pyth Network real-time data feed Announced live on Solana’s proof-of-stake blockchain through its cross-chain communication tool, called Wormhole.
And before that, Solana also successfully entered the NFT sector in mid-August with the launch of Degenerate apes—The project sold out 10,000 comic ape images in just eight minutes and grossed 96,000 SOLs in volumes (over $ 5.9 million at the time).
On the other hand, Solana’s 369% price boom from its July 20 low of $ 21.96 caused SOL to become grossly overvalued, based on its current relative strength index reading (near 81). That amounted to a short-term correction in the next few sessions.
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