Solana fundamentals strengthen as market becomes increasingly stretched
Solana has sharply improved its short-term technical structure after establishing itself above $103 following a series of positive developments. The fundamental backdrop remains strong, although an overbought RSI raises the risk of a correction after the sharp August advance.
The main catalyst has been the first major phase of Solana’s on-chain governance. As of August 28, SGP-0002, a proposal to accelerate disinflation, had received around 68.77% support, slightly above the required two-thirds threshold. The proposal would double the annual rate of inflation reduction from 15% to 30%, potentially cutting issuance by roughly 18.9 million SOL over six years and bringing the network closer to its terminal inflation rate of 1.5% more quickly.
Another notable catalyst has been the expansion of institutional access to Solana. Charles Schwab announced that it plans to add direct SOL trading to Schwab Crypto in the coming months, alongside Avalanche and Chainlink.
$103 turns into key support after strong rally
The base-case scenario from the previous analysis did not play out. Supported by strong news flow, SOL decisively broke above $103 and held there, changing the short-term technical structure.
As long as the price remains above $103, buyers retain the advantage. A move back below this level, however, would significantly increase the probability of a test of psychological support at $100.
Such a scenario cannot be ruled out given that the RSI (14) remains in overbought territory after the sharp August rally. The indicator points to short-term overheating and increases the risk of profit-taking.
The next notable resistance is around $117. After such a strong advance, however, buyers may struggle to push the price directly toward this level without an intermediate pullback.
SOL holds a bullish structure as fundamental support builds
Solana’s fundamental backdrop has strengthened noticeably over the past two days. Broader access through Charles Schwab and the potential reduction in future issuance provide SOL with several sources of support.
As long as $103 holds as support, the structure remains bullish. A break below this level would put $100 in focus, while a move toward $117 would likely require another wave of demand and some cooling in the RSI first.
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