- Pancake Swap’s native token CAKE, witnessed a spike in its social dominance early on Monday.
- The $10.4 million token burn announced by Pancake Swap is expected to act as a bullish catalyst for the DEX’s native token.
- Total value of assets locked in Pancake Swap has been on a consistent decline, alongside the decreasing CAKE price.
Pancake Swap, one of the largest DEXes in the crypto ecosystem, announced the burn of $10.4 million worth of CAKE tokens. While a token burn is typically considered bullish for the asset, in the case of CAKE, reducing its circulating supply is unlikely to catalyze a token's price recovery.
Key on-chain metrics, like total value of assets locked on Pancake Swap and staking of CAKE token, have both decreased considerably throughout the year. CAKE price has nosedived alongside these developments since the beginning of February 2023.
Pancake Swap awaits bullish catalysts to begin price recovery
8,222,066 $CAKE just burned - that’s $11M!— PancakeSwapEveryone's Favorite D3X (@PancakeSwap) August 21, 2023
Trading fees (V2 and Perpetual): 108k CAKE ($141k) +103%
Trading fees (V3): 37k CAKE ($48k) -7%
Prediction: 66k CAKE ($86k) -19%
️ Lottery: 36k CAKE ($47k) +27%
NFT Market, Profile & Factory: .7k CAKE ($1k) -3%
Token burns typically fuel asset prices, however there are other factors that are likely to contribute to CAKE’s price drop. Based on data from crypto intelligence tracker, DeFiLlama, there is a consistent decline in the total value of assets locked on Pancake Swap throughout 2023.
TVL, Staking on Pancake Swap
The volume of CAKE tokens staked has fallen alongside the total value of assets locked in Pancake Swap.
CAKE’s social dominance climbed on August 21, as seen in the Santiment chart below. The social dominance of the DEX token hit its highest level in 2023. This is an on-chain metric that reveals the relevance of the token among crypto holders.
Pancake Swap Social dominance vs price
It remains to be seen whether the token burn and the rising social dominance can fuel a recovery in CAKE price.
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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