BONK price falls over 7% after burning 1.69 trillion tokens-what’s going on?

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As a seasoned crypto investor with a knack for meme coins and a soft spot for Solana-based projects, I must admit that the recent performance of Bonk has left me scratching my head. The BURNmas event was a promising move, but the subsequent drop in price following the token burn left me feeling like I had just witnessed a New Year’s Eve fireworks display fizzle out prematurely.

Despite a recent token burn of 1.69 trillion BONK, the Solana-based meme coin Bonk persisted in its price drop.

8% of the total BONK supply (equivalent to 1.69 trillion tokens) with a value exceeding $51 million was destroyed in the BONK “BURNmas” community event, which took place on December 26 and was themed around dogs.

Following the active engagement in Burnmas, the revised vote has been approved, leading to the incineration of approximately 1.69 Trillion $BONK from the @bonk_dao multisig. This action has reduced the total circulation of $BONK tokens to 91 Trillion, a decrease from its initial supply of 100 Trillion #KeepBONKing

— BONK!!! (@bonk_inu) December 26, 2024

Beginning in late November, this project aimed to incinerate 1,000 BONK tokens for each post tagged #LetsBONK, and 10,000 BONK tokens for every new follower gained on Instagram and TikTok. The goal was to foster community interaction and boost the token’s exposure during the holiday season, with a grand total of 1 trillion tokens to be destroyed.

As a result of greater-than-anticipated participation on social media sites, the goal of releasing 1 trillion tokens was exceeded. Consequently, BonkDAO members agreed on a revised plan to boost the token burn quantity to approximately 1.69 trillion tokens by voting in favor of it.

In the world of cryptocurrencies, token burns are quite common, particularly with meme coins such as BONK. This coin originally had a total of 100 trillion tokens, but following recent burn events, its current supply has been reduced to approximately 90.97 trillion tokens.

As a crypto investor, I understand that when events occur that permanently withdraw a portion of tokens from circulation, it’s all about enhancing the token’s scarcity. This is achieved by tightening supply dynamics, which theoretically increases scarcity and, as a result, could potentially elevate the value of the token in the market.

After the token burn event by BONK on July 29, where approximately 84 million tokens worth more than $2 million were taken out of circulation, this action led to a significant surge in the token’s price, resulting in a 25% upward movement for me as an analyst.

On this occasion, unfortunately, the BURNmas show fell short of expectations. After the event, the token’s value dropped by more than 7%, and its market capitalization remained roughly at $2.3 billion.

Why is BONK price going down?

It seems that BONK’s (BONK) decrease didn’t have a specific trigger, but it happened around the same time as a wider crypto market slump. This decline was likely due to a more cautious investment attitude, stemming from Bitcoin‘s poor performance and its struggle to surpass $100k. Furthermore, reduced trading activity during holidays caused BONK’s volume to drop by approximately 8% within the last 24 hours.

Discontent arose within many BONK supporters due to the team’s inability to carry out the token burn on Christmas Day, as previously pledged. This postponement might have undermined investor trust and potentially triggered the subsequent sale of tokens.

A plausible explanation for BONK’s decline could be that investors shifted their investments towards the Pudgy Penguins’ token, Pengu (PENGU). In just a few days after its launch, PENGU achieved a market capitalization exceeding $2.2 billion and momentarily outranked BONK as the largest meme coin on the Solana blockchain on December 26th, even for a brief period.

Over the last seven days, the token has shown impressive growth, exceeding BONK’s performance by a significant margin. It surged by more than 32%, while BONK managed only a 7.2% increase.

Currently, the digital asset has created what’s known as a ‘god candle’ on its daily chart, usually indicating increased activity from large investors or whales. This unexpected price surge helped minimize some of today’s declines, pushing the token’s value up to approximately $0.000030.

Should additional investors adopt this trend, it might ignite another upward push for the meme coin, potentially reaching the significant resistance point at approximately $0.000034 – a barrier that BONK has attempted to surpass twice this week, yet hasn’t been able to break through thus far.

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2024-12-27 12:42