The recent increase in value of PancakeSwap has captured the attention of the cryptocurrency community, as its token, CAKE, witnessed an extraordinary 54% surge in just the past seven days.
With a robust market capitalization of nearly $900 million and an impressive fully diluted valuation of $1.3 billion, PancakeSwap has solidified its position as a significant player in the decentralized finance (DeFi) space.
Strategic Token Burn Propels PanCakeSwap Ascendancy
One of the key strategies contributing to PancakeSwap's success lies in its proactive approach to managing token supply.
In a strategic move to boost scarcity and create a more attractive investment proposition, PancakeSwap executed a token burn, incinerating more than 10 million CAKE tokens, valued at approximately $34 million, on December 26.
This deliberate reduction in the total supply by 40% has not only impressed investors but also earned PancakeSwap the endearing title of "everyone's favorite DEX" (Decentralized Exchange).
Despite prevailing market consolidation, the CAKE token has managed to defy the odds, maintaining a price above $2.1 and extending its recovery trend. Within just one week, the coin's price soared to the current trading value of $3.37, breaking decisively from a falling wedge pattern.
This latest burn has resulted in a notable reduction in the circulating supply of CAKE tokens, decreasing from 275 million to 265 million. Consequently, this development propelled the CAKE price by 18%, pushing its market cap to $894 million.
CAKE market cap currently at $896.764 million. Chart: TradingView.com
Crypto burns play a pivotal role in the digital assets sector by reducing asset supply, thereby creating heightened demand and boosting the value and prices of cryptocurrencies.
Although a proposal to cap the maximum supply at 450 million was previously made by the network to recover losses suffered by CAKE crypto, it is yet to be implemented. Meanwhile, the team will continue with substantial burns to support price movement until an alternative decision is reached.
Weekly Token Burns Signal PanCakeSwap's Commitment
The PancakeSwap team has further disclosed their intention to continue these token burns on a weekly basis, demonstrating a commitment to this approach until a decision is made to alter it.
This diminishing supply, coupled with the optimistic technical outlook, is anticipated to sustain a robust recovery trend in CAKE price.
CAKE seven-day price action. Source: Coingecko
Meanwhile, the coin's 24-hour trade volume increased by 37% to $284 million, with one-month gains exceeding 50%. Moreover, the token reached a new 30-day peak of $3.65 on Tuesday.
As of the latest update, CAKE maintains a bullish stance, registering a 27% increase in the previous day's trading and gaining over 6% within one hour of the most recent token burn.
The altcoin has also garnered increased crowd interest, with daily volume soaring by 75% to $330 million, although it remains 90% down from its April 2021 all-time high of $44.20.
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Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.
Source: NewsBTC.com
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