How Will NEAR Protocol Price React to its Governance Controversy? | Credit: Hameem Sarwar
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Key Takeaways
Near Protocol has been at the center of controversy following a recent governance proposal.
The NEAR price is struggling to maintain its footing and could break down from the $3 support area.
Is the governance controversy the final straw that will cause the NEAR price to fall to new lows?
Near Protocol (NEAR) is under fire after news of a heated governance proposal sparked debate over the project’s decentralization and decision-making integrity.
While the team introduced a tokenomics upgrade to reduce inflation and support smaller validators, the move has drawn criticism after the change was implemented despite failing to pass a community vote.
As controversy brews, NEAR’s price teeters on a breakdown from a critical support level, a breakdown below which could lead to new lows.
NEAR Governance Controversy
The Near Protocol team announced a significant tokenomics upgrade on Oct. 21. Its main ideas are that maximum inflation will be reduced to 2.5%, smaller validators will be supported to ensure network decentralization, and rewards for veNEAR holders will increase.
To vote on the changes, users must lock veNEAR and participate in the “House of Stake” initiative, which has several economic proposals live.
However, the governance proposal to reduce the inflation rate failed to pass, as it did not garner enough votes from the validators.
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Despite this, the team decided to implement this change, raising concerns of centralization in governance decisions.
Chorus One, a company specializing in validator infrastructure and staking services, was among the first to express concerns regarding the governance controversy.
The company summarized its concerns by stating that:
We believe this sets a dangerous precedent and undermines the integrity of NEAR. It gives the impression that decisions can be unilaterally enforced by the core team if validators aren’t careful about the changes implemented when they upgrade.
Chorus One believes that the only way to prevent the change is for validators not to upgrade.
While some believe the proposal is not unwarranted, given that NEAR is overspending to secure its network based on its stablecoin and TVL metrics, concerns remain that Near Protocol is overriding the wishes of its community.
NEAR Risks Breakdown
The NEAR price has struggled since its cycle high of $9 in March 2024. Until now, NEAR has declined by 76% and has trended downward for 588 consecutive days.
More recently, the NEAR price movement is contained within a horizontal range between $1.95 and $3.25.
Today, the NEAR price is close to the bottom of the range, which increases the risk of an eventual breakdown.
If that happens, NEAR could return to its bear market low of $0.97, which it last reached in October 2023.
Momentum indicators suggest a breakdown is inevitable. The Relative Strength Index (RSI) deviated above 50 while the Moving Average Convergence/Divergence (MACD) made a bearish cross (black circle).
When combined with the failure to stay in the range’s upper half, these readings suggest an eventual breakdown is the most likely future scenario.
The daily chart confirms this, showing that NEAR has traded within an ascending parallel channel since April.
The channel is considered a corrective pattern, and a breakdown becomes even more likely when considering that NEAR failed to reach the channel’s resistance trend line and now trades in its lower portion.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Valdrin Tahiri is a cryptocurrency analyst and reporter at CCN, specializing in technical analysis with a focus on Elliott Wave theory, on-chain metrics, and fundamental research. He brings over seven years of experience in the crypto space as both a trader and writer.
He discovered cryptocurrencies in 2017 while earning his MSc in Financial Markets at the Barcelona School of Economics, which sparked a deep interest in blockchain and market dynamics. Since then, he’s contributed to top crypto outlets like BeInCrypto and CoinGape.
Valdrin also served as Community Manager of BeInCrypto’s Telegram group for three years, helping grow it into one of the largest crypto communities worldwide. His expertise in market structure and price patterns allows him to break down complex trends into clear, actionable insights.
He’s published thousands of articles covering altcoins, Bitcoin cycles, and macro trends.
