In late November, the team behind the popular Solana-based meme coin BONK proposed burning 1 trillion tokens that the community would contribute in an event called BURNmas.
On Wednesday, they announced that they had surpassed that goal and will now burn a total of 1.69 trillion tokens in a move that could push the price of BONK to new heights.
As a result, Bonk is one of the few meme coins to post growth over the past 7 days, returning 7% to holders during this time.
Notably, on December 20, when the project founders announced that they had reached the initial 1 trillion milestone, BONK's price increased by 14%. However, the token still did not escape the pullback that the entire crypto market has experienced over the past few days, accumulating a 30-day loss of 25.6%.
Other tokens have also experienced similar declines during this period, including Dogecoin (DOGE), down 20.2%, and dogwifhat (WIF), whose 30-day loss was even higher at 42.6%.
Token burning involves sending a certain amount of tokens to a specific cryptocurrency wallet used to store the assets that will be permanently removed from the blockchain. A smart contract is created to automatically delete and contributors are verified to ensure that they own the amount of tokens they committed to sending to the burn address.
Once implemented, these tokens will no longer exist and thus the total supply of the asset will decrease.
The main goal of burning tokens is to create scarcity. In theory, this should help the value of the asset increase over time if demand remains constant or increases.
Data from CoinMarketCap shows that the current total supply of BONK is 92.66 trillion tokens. This means that a BONK 1.69 trillion boom would reduce the circulating supply by 1.8%.
BONK Continues to Fall as Markets Adjust to Federal Reserve's New Plan
The BONK/USD chart shows that the price has been in a clear downtrend since reaching an all-time high on December 20 at $0.00005029.
This descending channel is formed when the asset makes a series of lower highs and lower lows along the way and usually indicates significant weakness in demand for the token.
Hawkish comments from the Federal Reserve at its latest monetary policy meeting contributed to a drop in the value of some crypto assets. The US central bank said it is now prepared to make two interest rate cuts next year instead of the three it had originally planned.
Market participants interpreted this as a sign that inflation could pick up again in the next quarter or two, raising the possibility that the Fed could even stop its monetary easing.
Lower interest rates are typically beneficial for high-risk assets like cryptocurrencies as investors become more risk-averse and liquidity increases.
Despite this temporary weakness, the entire meme currency industry saw significant growth after Donald Trump declared victory in the US election in November.
The prices of most assets have surged to new highs since then and BONK is no exception, posting a 134.4% gain since the start of the year.
Currently, the chart suggests that the price could continue to decline in the near future unless there is a break above the upper trendline at some point in the future. However, given the significant gains that meme coins have made recently, this is a much-needed pullback, giving late buyers an opportunity to enter the market at a more favorable price.