The price of BONK drops more than 7% despite the burning of 1.69 trillion tokens—what’s behind the decline?

Despite the recent burning of 1.69 trillion BONK tokens as part of the “BURNmas” community event, the price of Solana-based meme coin Bonk (BONK) continued its downward trend, falling over 7%. The token burn event, held on December 26, aimed to reduce the total supply of BONK tokens, theoretically increasing scarcity and driving up its value. However, the outcome was contrary to expectations, as the price of BONK continued to drop, and its market capitalization hovered around $2.3 billion, significantly lower than anticipated after the large-scale burn.

The burn of 1.69 trillion tokens was part of Bonk’s strategy to make the coin more scarce, a common approach among meme coins. Initially, the goal was to burn 1 trillion tokens through community engagement, such as posting on social media platforms like Instagram and TikTok. However, due to higher-than-expected participation, the original target was surpassed, and the community voted to increase the burn to 1.69 trillion tokens, which represented over 1.8% of the total supply.

Despite this, the price of Bonk failed to rise. One reason for the decline could be the broader downturn in the cryptocurrency market, particularly with Bitcoin struggling to maintain a price above $100,000. The overall “risk-off” sentiment in the market likely led to many investors selling off their assets, including BONK, which contributed to the price drop.

Another contributing factor could be the disappointment among some BONK holders due to the delay in the token burn event, which was initially promised to happen on Christmas Day. The postponement might have dampened investor confidence, leading to selling pressure.

Furthermore, the emergence of the Pudgy Penguins token, Pengu (PENGU), added competition for Bonk. PENGU gained significant attention and quickly amassed a market capitalization of over $2.2 billion, briefly surpassing BONK as the largest meme coin on the Solana blockchain. This shift in investor interest, along with PENGU’s strong performance, which saw a 32% increase in value, may have drawn funds away from Bonk, further contributing to its decline.

Additionally, despite Bonk’s price experiencing some minor rallies in recent weeks, the overall market sentiment and competition from other meme coins have resulted in a prolonged sell-off. The lack of sustained growth after the token burn shows that while burning tokens can reduce supply, it is not the only factor influencing a token’s value, especially in a competitive and volatile market.