Solana’s 80% Inflation Cut Could Spark Price Surge

A widely followed analyst has expressed a bullish outlook on Solana (SOL) in the long term, citing an upcoming network upgrade as a potential catalyst for significant price appreciation. The analyst, known by the pseudonym InvestAnswers, highlighted a proposal to reduce Solana’s inflation rate by approximately 80% at the end of Epoch 755. This reduction, if approved, would lower Solana’s inflation rate from around 4.8% to 0.86%, making it one of the lowest among major cryptocurrencies.

An Epoch in the Solana network is a fixed period during which various network activities, including governance matters and protocol upgrades, are decided and executed. The analyst suggests that this reduction in inflation could position Solana as the hardest layer-1 asset, given that Bitcoin’s inflation rate is currently at 0.85%. The potential approval of a spot Solana exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC) could further bolster Solana’s bullish prospects. InvestAnswers posits that if a Solana ETF is approved, the limited supply of Solana on exchanges, coupled with significant staking, could drive a substantial price increase.

The analyst also addressed concerns about reduced staking rewards due to the proposed inflation cut. InvestAnswers argues that the potential price appreciation of Solana would far outweigh any reduction in staking rewards. He emphasizes that investors should prioritize price appreciation over staking rewards, as the former has a more significant impact on the overall value of the asset. At the time of writing, Solana is trading at $126. The analyst’s optimistic outlook is based on the potential for Solana to become a highly deflationary asset, which could attract more investors and drive up its price. The upcoming vote on the inflation reduction proposal and the possibility of an ETF approval are seen as key catalysts that could trigger a significant price increase for Solana.