As bitcoin staged a recovery rally to above $98,000, Solana-based bonk (BONK) led growth among dog-themed memes on Saturday, following a bloodbath the day before that pushed it near $93,000.
Market Recovery and Volatility
The market-wide jump of 4.5% as tracked by the broad-based CoinDesk 20 (CD20) index was dwarfed by the average gain of 8% in the dog-themed token category over the past 24 hours, with bonk surging 30%. CoinGecko data shows that dogecoin (DOGE), shiba inu (SHIB), and floki (FLOKI) also surged as much as 20%.
Memecoins: High Volatility and Leveraged Bets
Memecoins are known for their high volatility, which tends to outperform major tokens during price rallies. This phenomenon is largely due to the fact that memecoins serve as a leveraged bet on the overall crypto market sentiment.
However, in this case, fundamentals are helping back gains and sentiment among some memecoins. The recent surge can be attributed to a combination of factors, including:
Fundamentals and Utility Tokens
FLOKI was named alongside ether (ETH) and Avalanche’s AVAX as a utility token in a Commodity Futures Trading Commission (CFTC) meeting last month.
The derivatives regulator proposed in a Global Markets Advisory Committee (GMAC) a new class of assets termed utility tokens, which fulfill six criteria that include providing their holder "immediately available, non-incidental consumptive use" in a crypto platform without including "governance and voting abilities."
Utility Token Validation
FLOKI’s recent validation as a case study of a utility token is a significant development. This puts Floki on an entirely different level from other memecoins, especially when the market turns and people start to pay attention to fundamentals again.
As Floki lead developer B told CoinDesk in a Telegram message:
"FLOKI was recently highlighted by the CFTC’s Global Markets Advisory Committee as a case study of a utility token, which is a big deal and validates Floki’s utility-first approach. Floki’s Valhalla metaverse game will go live in early Q1 2024, and the recently released Floki Trading Bot has generated over a million dollars in fees."
BonkDAO and Token Burn
Elsewhere, interest in BONK comes as a host of activities intend to deflate token supply gain traction among users — a move that has historically contributed to higher prices.
BonkDAO, a decentralized group of bonk believers that maintain the token, burned 100 billion tokens from the circulating supply in November and targeted a trillion token burn in December. This could increase the token’s value due to scarcity.
Token Burn Statistics
In just the last 30 days, over 30 BILLION $BONK have been burned across 3,856 wallets, averaging a scorching 1 BILLION daily! The leading contributors to this effort are @bonkbot_io and @BonkEarn, setting the standard for burns.
As Ario (@ario_57_) tweeted:
"And guess what? 1 TRILLION $BONK is about to go up in smoke by… December 2024!"
Implications of Token Burn
The feat could meet its target in the weeks ahead, observers say. This has significant implications for the token’s value and the broader market.
As the market continues to navigate the complex landscape of memecoins and utility tokens, one thing is clear: fundamentals are playing a crucial role in shaping sentiment among some memecoins.
Conclusion
The recent surge in BONK and other dog-themed memes highlights the importance of fundamentals in driving price rallies. As the market continues to evolve, it will be interesting to see how these developments impact the broader crypto landscape.
References
- CoinGecko: BONK Price Chart
- CFTC: Global Markets Advisory Committee (GMAC)
- Floki: Valhalla Metaverse Game
- BonkDAO: Token Burn Tracker
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