Solana-based meme coin Bonk continued its downward rally despite the project recently burning 1.69 trillion BONK tokens.
On December 26, more than 1.8% of BONK’s entire supply, amounting to 1.69 trillion tokens worth more than $51 million, was burned as part of the dog-themed meme coin’s community celebration called the “BURNmas “.
Initially proposed in late November, the project planned to burn 1,000 BONK for every tokens. The idea was to encourage community involvement and increase the token’s visibility during the holiday season.
However, due to higher than expected engagement on social media platforms, the original goal of 1 trillion tokens was surpassed. In response, BonkDAO members voted in favor of an updated proposal to increase the number of tokens burned to 1.69 trillion tokens.
Token burning is a common occurrence in the crypto world, especially among meme coins like BONK, which boasts a total supply of 100 trillion tokens, now reduced to 90.97 trillion after recent burns.
By permanently removing a portion of tokens from circulation, these events aim to tighten supply dynamics, theoretically increasing scarcity and in turn driving up the value of the token.
For example, following BONK’s previous token burn event on July 29, when 84 million tokens worth over $2 million were removed from circulation, this resulted in a 25% rally for the token.
This time, however, the BURNmas spectacle failed to deliver, with the token falling more than 7% after the event, while its market capitalization hovered around $2.3 billion.
Why is the BONK price falling?
While there was no solid reason that led to the sell-off, BONK’s (BONK) decline coincided with a broader downturn in the crypto market, fueled by risk-off sentiment driven by the lackluster performance of Bitcoin, which struggled to rise above limit of $100,000. Additionally, holiday-induced low trading activity caused BONK’s volume to drop more than 8% over the past 24 hours.
Frustration was also brewing among various BONK enthusiasts expressed dissatisfaction over the team’s failure to carry out the Christmas Day token burn as originally promised. This slowdown may have dampened investor confidence and contributed to the sell-off.
Another possible reason why BONK fell is that many investors converted their investments into Pudgy Penguins’ token, Pengu (PENGU). Just days after its launch, PENGU amassed a market capitalization of over $2.2 billion and even surpassed BONK as the largest meme coin on the Solana blockchain on December 26.
The token has also outperformed BONK over the past week, gaining over 32% compared to BONK’s rally of 7.2%.
At the time of writing, the token formed a god candle on the daily chart, which is typically a sign of whale activity. The sudden price increase managed to mitigate some of the day’s losses, bringing the token’s price to $0.000030.
If more investors follow suit, it could mark another move for the meme coin towards the key resistance level at $0.000034, a level that BONK tested twice this week but failed to break through.
