News of BonkDAO’s decision to burn 1.69 trillion Bonk [BONK] tokens during the “BURNmas” event has captured the crypto community’s interest.
By removing tokens worth $54.52 million from circulation, the total supply of BONK has been reduced by 1.8%.
This move could have significant implications for the market. Currently, BONK is trading at $0.00003144, showing a 6.50% decrease in the last 24 hours.
Given this deflationary step, one wonders: How will it impact BONK’s price and market sentiment going forward?
What is the Forecast for BONK’s Price Movement?
Observing BONK’s price movement reveals a resistance pattern, particularly at the $0.00003517 level. This resistance level may impede further upward progress unless there is a significant surge in buying volume.
Despite this, with BONK priced at $0.00003144 currently, breaking through this resistance could be challenging without enhanced market backing.
The 6.50% decline in the past 24 hours indicates that the trend is still consolidating.
Social Volume Analysis
Social Volume data indicates a decline in interest surrounding BONK. In mid-November, social mentions peaked at over 290, but by December 26th, they had fallen to just 22.
This considerable drop in social engagement suggests that the hype around the token burn is waning.
While high Social Volume often signals robust price movements, this decrease might signal a shift in the market’s focus away from BONK, waiting for a new catalyst to reignite momentum.
Are Traders Pessimistic about Further Declines?
Market sentiment appears to favor short positions heavily. As of December 26th, only 29.97% of positions are long, while 70.03% are short.
This data indicates that traders anticipate a further decline in BONK’s price.
The substantial short interest indicates a bearish outlook, although this could result in a short squeeze if the market takes an unexpected turn.
What do Technical Indicators Suggest about Price Trends?
Technical indicators present conflicting signals. The Average Directional Index (ADX) stands at 23.51, indicating a weak trend, while the Moving Average Convergence Divergence (MACD) displays a negative reading of -0.00000036.
These indicators imply that while a minor rally could occur, the market lacks the robust momentum needed to sustain a significant price increase in the short term.
Market Sentiment Overview
The OI-Weighted Funding Rate has fluctuated between -0.09% and 0.09% in recent months, settling at 0% presently.
This suggests that traders are uncertain about the market’s direction and hesitant to take large positions, resulting in a neutral market stance.
While the token burn event by BonkDAO reduces BONK’s supply, the prevalent bearish sentiment, evident in Social Volume, Long/Short Ratios, and weak technical indicators, indicates that this deflationary move may not trigger a substantial price surge in the short term.
Thus, barring new catalysts, a significant price increase for BONK seems unlikely.