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.
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).
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.
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.
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
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.
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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