OKB, the native token of the crypto exchange OKX, plunged 170 percent in the wake of a significant supply burn step completed by the company. OKX said it will burn 65.26 million OKB in a one-time market buyback to permanently hard cap the total supply of the token at 21 million.
This burn will eliminate all remaining tokens held in the company reserve, and it can probably be attributed to the need to increase scarcity and long-term value.
After the spike, OKB is hot and is now traded at approximately $107 after reaching $124.
Record OKB Supply Cut Triggers Market Pump
A token burn is a method of instituting deflationary pressure. By removing the reserve supply, OKX has essentially locked the circulating supply in the future, providing the investors with a greater understanding of the tokenomics.
The announcement triggered a buying rush to drive OKB to new heights and attract massive interest among retail and institutional investors.
Analysts say that when there is such a big surge, especially in one day, it usually leads to additional volatility and the need to take profits.
Technical Indicators Show Overbought Conditions
The daily Relative Strength Index (RSI) for OKB has shot up to 95, which is far into overbought territory, even if the mood is still optimistic. This means that the coin might have a short-term decline as traders extract profits.
Nevertheless, the market largely considers the drop in supply a long-term value-positive move, which further indicates the role of OKB in the OKX ecosystem and even makes it more popular as a deflationary asset.
The upcoming sessions will be crucial in determining whether the price consolidates above the $100 level or pulls back further before establishing new support areas.
