Solana-based meme coin Bonk continued its downward rally despite the project recently burning 1.69 trillion BONK tokens.

On Dec. 26, over 1.8% of BONK’s entire supply, amounting to 1.69 trillion tokens worth over $51 million was burned as part of the dog-themed meme coin’s community holiday token burning event dubbed the “BURNmas.”

Based on community participation in Burnmas, the amended vote has passed and 1.69 Trillion $BONK has been burnt from the @bonk_dao multisig

The Total Supply of $BONK is now down to 91 Trillion Tokens from it’s original 100 Trillion ❗️❗️❗️#LetsBONK

— BONK!!! (@bonk_inu) December 26, 2024

Initially proposed in late November, the project planned to burn 1,000 BONK for every X post using the hashtag #LetsBONK, and 10,000 BONK for every new follower gained on Instagram and TikTok, with a final target of burning 1 trillion tokens. The idea was to spur community engagement and increase visibility for the token during the holiday season.

However, due to higher-than-expected engagement across social media platforms, the initial target of 1 trillion tokens was surpassed. In response, BonkDAO members voted in favor of an updated proposal to increase the burn amount to 1.69 trillion tokens.

Token burns are a common occurrence in the crypto space, 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 chunk of tokens from circulation, these events aim to tighten supply dynamics, theoretically boosting scarcity and, in turn, driving up the token’s value.

For instance, following BONK’s previous token burn event on July 29, when 84 million tokens valued at over $2 million at the time were removed from circulation, it resulted in a 25% rally for the token.

This time, however, the BURNmas spectacle failed to deliver, with the token dropping over 7% following the event with its market cap hovering around $2.3 billion.

Why is BONK price going down?

While there was no solid reason that sparked the sell-off, BONK’s (BONK) decline coincided with a broader downturn in the crypto market, fueled by a risk-off sentiment driven by Bitcoin’s lackluster performance, struggling to recover above the $100k mark. Additionally, holiday-induced low trading activity saw BONK’s volume drop over 8% in the past 24 hours.

Frustration also brewed among several BONK enthusiasts, who voiced dissatisfaction over the team’s failure to execute the token burn on Christmas Day as originally promised. This delay may have dampened investor confidence and contributed to the sell-off.

Another potential reason why BONK dropped is that many investors may have rotated their investments into Pudgy Penguins’ token, Pengu (PENGU). Just days after launching, PENGU amassed a market cap of over $2.2 billion and even briefly surpassed BONK as the largest meme coin on the Solana blockchain on Dec. 26.

The token has also outperformed BONK over the past week, gaining over 32% compared to BONK’s 7.2% rally.

At press time, the token had formed a god candle on its daily chart, which is typically a sign of whale activity. The sudden price rise managed to mitigate some of the day’s losses, bringing the token’s price to $0.000030.

If more investors follow suit, it could spark the next leg up for the meme coin toward the key resistance level at $0.000034, a level BONK has tested twice this week but failed to breach.