Breaking How Token Burns Affect Price, And When They Don’t

Token burning only raises prices when demand, utility and transparency align. Here’s when supply cuts work, and why SHIB and BNB tell different stories.

Token burns are a key part of many projects’ tokenomics. They permanently remove coins from circulation, but supply cuts alone don’t guarantee price gains.

Burns work best when supported by strong fundamentals, meaningful burn volume and rising demand.

Market trends, investor sentiment and burn transparency all shape price impact.

Tokens with high burn rates, like Shiba Inu, haven’t seen matching price growth because demand didn’t rise with reduced supply.

BNB shows that consistent, revenue-backed burns and strong ecosystem activity can drive lasting deflationary pressure.

Imagine you own a restaurant and decide to remove 20% of your menu every week. Does that make the restaurant better? Not really, unless more customers start showing up. That, in a nutshell, is what token burning is about.

Token burning is the process of sending crypto tokens to an unusable wallet address to permanently remove them from circulation. The receiving address has no private key, making recovery impossible. It’s like throwing money into a locked vault with no combination.

When a token burn happens, the total supply of that token in circulation decreases. Another way to look at it: imagine you hold 1,000 tokens out of 10 million total. You own 0.00001% of the supply. After a 50% burn, you would own 0.00002% of the total supply. On paper, your stake has grown.

However, this is where things get interesting and where most people misunderstand burns. The technical metrics are straightforward, but the real-world implications are complex.

Source: CoinTelegraph