PancakeSwap’s CAKE rallies 17.5% amid $151 million worth token burning event

PancakeSwap's CAKE rallies 17.5% amid $151 million worth token burning event
“Soon I will rest” by GollyGforce – Living My Worst Nightmare is licensed under CC BY 2.0
  • CAKE/USDT surged by nearly 18% to $22.86
  • PancakeSwap’s massive token burning update fuelling the rally
  • NFT marketplace launch just around the corner
  • Daily trading volumes on PancakeSwap exceed both versions of Uniswap

JAIPUR (CoinChapter.com) – The CAKE/USDT pair broke out of its stagnation to log an 18% rally. The pair topped out at $22.86 amid PancakeSwap’s weekly CAKE burn event. A total of 7,177,652 tokens worth $162 million went to a “dead-end” address.

Bullish bets on the CAKE/USDT pair rose significantly amid PancakeSwap’s “all-time high” claim for the latest token burn event. The decentralized exchange also bought back $3.44 million worth of CAKE tokens from the market, it said in its latest tweet.

What is PancakeSwap?

PancakeSwap is an Automatic Market Maker (AMM), like Uniswap but native to Binance Smart Chain, Binance’s Ethereum compatible blockchain. It lets users earn passive income through liquidity mining, staking, etc. Users receive liquidity (read LP) tokens in exchange for providing liquidity in a particular pool.

Related: Pancake Swap, Cream Among DeFi Protocols To Experience DNS Breach

The PancakeSwap protocol also allows users to farm its native tokens – CAKE and SYRUP. Users can also bet on CAKE tokens to receive SYRUP, which has additional functionality as management tokens (and lottery tickets).

Why CAKE Burning Caused A Price Spike?

Essentially a burning process renders tokens unusable, pulling them out of the total supply permanently. Thus, a supply squeeze sets in motion due to the introduction of a deflationary feature. Furthermore, since CAKE already enjoys optimum demand due to PancakeSwap’s widespread adoption in the DeFi space, a token burn (an ATH one) implies a reduced circulation.

CAKE burning transaction details
CAKE burning transaction details. Source: BscScan

A similar scenario played out in the recent rally, and bulls ended up buying CAKE tokens en-masse to avoid a classic FOMO-laced situation. However, it’s not the token burning that sent CAKE/USDT spot rates soaring.

Volumes Exceed Uniswap And Upcoming NFT Marketplace

Apart from Wednesday’s token burning event, long-term investors also assessed PancakeSwap’s leading position over Uniswap V2 and V3 (regarding daily trading volumes, transactions, and users) to place buy bids on the CAKE/USDT pair.

Plus, PancakeSwap’s upcoming NFT marketplace launch further whetted buying appetite, resulting in a sharp increase in CAKE prices since Monday.

“We’re aiming to launch the first version of #PancakeSwap’s NFT marketplace and minting of the #PancakeSquad NFTs on September 22nd.

All fees from the NFT marketplace and #PancakeSquad will be used to buyback & burn $CAKE

Not gonna lie, I am very excited. Are you?”

announced the PancakeSwap team in a recent tweet

CAKE/USDT Technical Setup

The CAKE/USDT pair formed a double bottom setup during its intermittent bearish phase. Traders placed long bets on the bullish formation after analyzing the said formation. However, the rally has led CAKE into the overbought territory.

PancakeSwap's CAKE still has bullish steam left
PancakeSwap’s CAKE still has bullish steam left. Source: CAKEUSDT on TradingView.com

Relative strength index (RSI) peaked at 75.45, after which profit-takers appeared to sell the $22.86 local top. The token nonetheless remains fundamentally bullish on account of the above-discussed factors. Nevertheless, bearish pressures could push down the CAKE/USDT pair to $20.58.
But if bulls manage to take back control, a reclamation of $26.16 would become likely. Beyond it, the next target for buyers lies at $29.84.

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