When They Raise Prices — and When They Don’t

Take key

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

• Burns perform best when supported by strong fundamentals, significant burn volume and growing demand.

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

• Tokens with high burn rates, such as Shiba Inu, did not see a corresponding price increase because demand did not grow with reduced supply.

• BNB shows that consistent burns, supported by revenues and strong ecosystem activity can lead to lasting deflationary pressure.

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

Token burns 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 without combination.

What’s the deal with token burns?

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

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

The paradox of supply and demand no one talks about

Economic theory suggests that less supply and stable demand lead to higher prices. Water becomes more valuable during a drought, gold is valuable because it is scarce, and Bitcoin (BTC) has value because only 21 million tokens will ever exist.

The math seems infallible. If a project burns tokens without the price going down, any remaining token should, in theory, be worth more. However, real-world results rarely match the theory.

Here’s why: the price of the token is not just about supply. It depends on what buyers are willing to pay. If no one wants it, scarcity doesn’t matter. Scarcity without demand creates an asset that is expensive to hold, but worthless in practice.

The price of a token reflects three forces working together:

• Supply: How many tokens exist

• Demand: How many tokens market participants want to buy

• Feeling: How the market believes the token will do.

Eliminate supply without addressing demand or sentiment, and operate with incomplete information. It’s like trying to predict stock prices by looking only at the number of shares, ignoring company performance and market conditions.

The winning formula: When the token burns really affect the price

Token burns work best under specific conditions. Understanding these patterns helps to distinguish the genuine ones deflation strategies from marketing tricks.

Condition 1: Consistent, real input

The strongest burns are supported by real activity in the ecosystem. BNB (BNB) quarterly burns illustrate this well. Under its current Auto-Burn system, BNB tokens are permanently deleted based on a transparent formula linked to BNB price and onchain activity. In October 2025, look up 1.44 million BNB tokens were burned, marking the 33rd consecutive quarterly burn.

This is important because the burn reflects the use of the genuine network and the reduction of the transparent supply. The project is not printing new tokens to destroy or create artificial scarcity. Instead, it uses measurable blockchain activity to regulate supply, which shows that the ecosystem remains active and structurally deflationary.

When the burns are linked to the activity of the real ecosystem, investors see proof that the project creates lasting value. This, in turn, creates confidence that supply reductions will continue sustainably, not just as a marketing move during bull markets. Binance has maintained this quarterly burn for years, demonstrating that the mechanism remains consistent and transparent.

Condition 2: Significant reduction in supply

A supply reduction of 0.001%? Most markets ignore it. The burn needs to create a significant scarcity.

Ethereum’s fee burning mechanism, Ethereum Improvement Proposal (EIP) 1559, eliminates transaction fees from the circulation. According to data from Ultrasound.money, look up 4,626,088.10 Ether (ETH) has been burning for more than four years and 91 days since the update went live. While this may seem modest, it addresses a key issue: Ethereum network activity once caused inflation through mining rewards. By raising fees, the protocol helps balance that inflation.

In contrast, many altcoins burn millions of tokens from a quadrillion-token supply. The percentage reduction is negligible. It’s like claiming to reduce the world’s population by sending a few dozen people to the moon – technically true, but practically irrelevant.

The principle is simple: Burn percentage matters more than the absolute number of tokens destroyed. Reducing supply by 2% affects scarcity much more than burning a billion tokens from a supply of one frame. This is why projects with massive initial supplies struggle to sustain burn-based value narratives.

Condition 3: Demand for the growing ecosystem

Many projects miss the real driver of value: the growth of the ecosystem. Burning tokens creates potential value, but sustained adoption turns this potential into reality.

BNB quarterly burns work because the BNB Smart Chain continues to expand. Under its Auto-Burn and BEP-95 mechanisms, onchain activity and gas fees determine how many tokens are destroyed. As more applications are launched, network usage increases, generating more fees and blocks, which in turn support larger burns. It becomes a cycle of growth that feeds on participation and real demand.

The Ethereum token burned through EIP-1559 works for similar reasons. The network serves as the backbone for decentralized finance (DeFi), smart contracts and non-fungible tokens (NFTs). As usage increases, more base fees are burned, gradually reducing the net emission. The burning is not imposed; it is a byproduct of real onchain activity.

Condition 4: Market sentiment and timing

Burns announced during bull markets tend to generate more excitement than identical burns in downturns. Investor sentiment plays a big role in how token burns affect the price.

When the 33rd quarterly burn of BNB was announced at the end of October 2025, the token was trading near recent highs and rose by a few percentage points after the event. The same burn during a market slump might have attracted less attention or even been seen as a defensive move.

Transparency is also important. Projects that share burn schedules in advance and provide chain proofing build credibility. Surprise burns or vague statements, on the other hand, often raise doubts. Investors prefer to check the burns independently rather than relying only on the claims of a project.

When the burns fail completely

Understanding why token burns succeed is valuable, but recognizing failed burns is equally crucial for investors and traders.

The massive supply problem

Shiba Inu (SHIB) offers a cautionary example. Since 2021, more than 410 trillion SHIB tokens have been burned, including the well-known event when Ethereum co-founder Vitalik Buterin. burned about 410 trillion tokens – about 90% of what he had been gifted. Yet SHIB is still trading at a small fraction of its 2021 high.

For what? The remaining supply is still massive at around 589 trillion tokens. Burning 410 trillion from a near-quadrillion-token supply leaves a huge amount in circulation. Even continued aggressive burning has failed to create a significant shortage.

The numbers tell the story: At the current burn rate, SHIB would need several decades or more to achieve true scarcity. The initial supply of the project was so large that even the totals of dramatic burns are in error of rounding for mathematicians and market participants.

The demand has evaporated

Shiba Inu also illustrates the problem of demand. Burning rates in October were 407.77% higher than in September, according to data by Shiba Burn Tracker. The price increase? No. It has actually declined further since then.

Many investors have moved to newer projects, fresh narratives or established cryptocurrencies that offer better returns. The token has become a relic of the 2021 bull market rather than a forward-looking project. Community interest took off despite the accelerated burns. The enthusiasm of the trade has decreased, and without new participants, the scarcity cannot support the prices.

This model repeats itself often: Projects burn aggressively, while their ecosystems stagnate. No new development, no partnerships, no expanding use cases. Scarcity without demand creates something that is rare and worthless.

Market “prices in” burn expected

When the burns become predictable and automatic, something interesting happens: the market stops reacting to them.

If BNB were to announce their quarterly burning schedule for the next three years, traders would immediately make the information in current prices. Don’t wait for every quarterly event. The positive effect of burnout develops gradually during the anticipation phase, not suddenly when it occurs.

Repeated, planned burns lose their psychological impact. Investors priced them in immediately rather than responding incrementally. This is why surprise or larger than expected burns move the markets, while routine burns fade into the background.

How should investors think about the burns?

Token burns work best when applied in thriving ecosystems that generate real demand. They fail when used as stand-alone fixes for fundamental problems.

Here are the key questions to keep in mind when evaluating a token burn:

• Is there real system activity? Look for actual use, not just a promising roadmap.

• Who finances the burning? Real revenues matter more than arbitrary decisions.

• What is the burning percentage of the total supply? Large burns relative to the total supply have an impact; the little ones are not.

• How does the market react to previous burns? Does the momentum continue afterward, or does it fade quickly?

• Is the project transparent? Can chain burns be checked?

What token burns really tell us

Token burning impacts the price only when specific market conditions align: a significant reduction in supply, increasing demand, revenue supporting the mechanism, favorable market sentiment and transparent execution. Burning alone accomplishes little; it is one element of a wider strategy, not a strategy in itself.

The difference between successful and failed burns is usually not the size of the burn; is if the market really wants the token. Projects that attract developers, users and real adoption see the burns contribute to long-term value. Those without impulse find that burns create temporary excitement followed by disappointment.

Projects like BNB succeed by combining scarcity with utility, transparency and ecosystem growth. It is the formula that is worth understanding. Everything else is just hearsay.