$DOGS Token Burn: Will Deflationary Measures Drive Price Higher?

9 oct

The memecoin space is buzzing with the latest news from Dogs (DDOGS) and Notcoin (NOT), two projects built on The Open Network (TON). In a move designed to shake up the market, both projects have announced a massive token burn, a deflationary mechanism that is expected to reduce the circulating supply of their tokens and potentially boost their value. On October 9, a total of 4.8 billion DDOGS tokens, worth approximately $3.5 million, were burned, triggering excitement among holders.

But can this significant burn event translate into a long-term price rally for DDOGS?

The Impact of Token Burns on DDOGS
Token burning is a deflationary practice where tokens are permanently removed from circulation, typically by sending them to a dead wallet. The goal is to reduce supply, thereby creating scarcity that can drive up demand. This is the strategy employed by both DOGS and Notcoin in their recent burn event, aimed at decreasing the token supply to help stabilize prices and encourage a bullish outlook.

- The Burn Event: On October 9, DOGS burned 4.8 billion tokens, accounting for roughly $3.5 million. This is a massive reduction in circulating supply, with the expectation that scarcity will boost the token’s price over time.
- Charitable Contribution: In addition to the burn, the DOGS community has committed to donating 6 billion unclaimed tokens to charity, adding a philanthropic angle to the project. This move not only garners goodwill but also reduces the number of tokens in circulation.
- Market Cap and Current Price: As of this writing, DOGS trades at $0.0007031, with a market capitalization of $363 million. While the token has seen a dip of 6.68% in recent days, the burn event has created anticipation that the reduced supply will eventually stabilize and elevate the price.
- Burns in Memecoin History: Historically, token burns have had mixed effects on price. Memecoins like Shiba Inu (SHIB) and Floki have used similar mechanisms to induce price stability. For example, Shiba Inu saw its price remain stable after a 438% burn rate. Similarly, the Floki DAO burned 15.246 billion FLOKI tokens to spur a bullish reversal. If the same trend holds true for DOGS, the token could experience a resurgence in value once the impact of the burn is fully realized.


Technical Outlook:
From a technical standpoint, DDOGS is presenting signs of a potential bullish reversal, but it still faces volatility in the wake of the burn event.
DDOGS is currently in a falling wedge pattern, a bullish chart pattern that typically signals a reversal. A falling wedge occurs when the price consolidates between two downward-sloping trendlines, and when paired with strong fundamentals, it often leads to a breakout.

One critical aspect hindering DOGS’ breakout is the lack of trading volume. While the burn has created significant buzz, the token requires an influx of volume to thrust it out of the wedge pattern. Volume is essential for pushing prices higher and sustaining momentum, especially when the market is still digesting the impact of the burn.

The next critical level to watch is $0.00119, which represents the one-month high for DOGS. If DDOGS can break through this level, it could confirm the bullish reversal and potentially set the token on a path toward reclaiming its all-time high (ATH).

While the falling wedge pattern signals a potential upside, investors should note that token burns do not always guarantee a price rally. If the broader market sentiment remains weak, DOGS could struggle to achieve the volume necessary for a breakout.


What Could Trigger a Bullish Rally?

The combination of the token burn and the technical setup creates a compelling case for a bullish reversal, but several factors will determine the strength of DOGS’ rally:

- Increased Volume: For DDOGS to capitalize on the falling wedge pattern and break through resistance, there needs to be a significant increase in trading volume. Without this, the token could remain range-bound, despite the positive fundamentals.

- Positive Market Sentiment: Memecoins often move in tandem with market sentiment. As we’ve seen with other projects, community enthusiasm and media coverage can play a significant role in driving demand. If the broader crypto market rallies or if DOGS gains further media attention, it could trigger a surge in buying interest.

- Sustained Burn Activity: While this initial burn has reduced the circulating supply, the DDOGS team could engage in more frequent burns to maintain scarcity and encourage long-term price appreciation. Regular burns, combined with growing adoption, could form a solid foundation for future growth.

Conclusion: Can DDOGS Follow in the Footsteps of Other Burn Projects?
DOGS’ massive token burn has created a strong deflationary narrative, and the technical outlook suggests that a bullish reversal is possible, especially if the token can overcome key resistance levels. However, a successful rally will depend on increased volume and positive market sentiment.

For now, DDOGS holders will be closely watching the price action around the $0.00119 pivot point, as a breakthrough here could signal the start of a significant upward move. With a strong community backing and deflationary measures in place, DDOGS has the potential to follow in the footsteps of other successful burn projects like Shiba Inu and Floki.

Investors should remain cautious, but optimistic, as the burn’s long-term impact on price stability unfolds.