Bonk price has made headlines this week as it helped to push Solana and other related cryptocurrencies much higher. The token soared to an all-time high of $0.0000036, which was much higher than its all-time low of $0.00000090. According to CoinMarketCap, the token has seen its total market cap soar to more than $220 million. In this article, I will explain what Bonk is and whether it will be a good long-term investment.
What is Bonk?
Bonk is a new cryptocurrency that airdropped on Christmas Day. According to its white paper, Bonk describes itself as a community coin for the Solana ecosystem. It has been described as the Shiba Inu equivalent of the Solana ecosystem. Its whitepaper says that its aim is to eliminate the power of VCs that exist in the blockchain industry. Indeed, Solana was a major victim because of its close association with FTX and Alameda Research.
Bonk developers hope to use lessons learned from other once-popular meme coins like Shiba Inu, Floki Inu, and Tamadoge to guarantee its success. As a key part of Solana’s ecosystem, Bonk will be used to power the ecosystem’s applications in industries like Decentralised Finance (DeFi) and Non-Fungible Tokens.
According to the developers, Bonk tokens will be distributed to important players in Solana’s ecosystem. 20% of all tokens will go to 40% of the most active NFT projects in Solana. This is notable since Solana is one of the most active players in the NFT industry. Another 15% of Bonk supply will go towards OpenBook, a new DeFi project that is being developed to replace Serum. Openbook is a small player with a total value locked of less than $3 million.
Another 10% of supply will go to artists and collectors of NFT art while the other 5% will go to Solana contributors. Other funds will be allocated to early contributors, future contributors, Bonk DAO, initial liquidity distribution, and marketing.
Is Bonk a good investment?
So, will Bonk price continue rallying? We have been here before. In the past few months, we have seen many meme projects disappear. For example, we saw the hype that surrounded Tamadoge, which then faded. Further, we saw the hyped launch of tokens like Floki Inu and Dogelon Mars.
Additionally, as described in the tokenomics, there is just too much tokens that are going to insiders. Therefore, I suspect that Bonk price will soon crater as insiders start to exit their positions. Turning to the 5-minute chart, we see that the token has pulled back sharply recently. It is approaching the important support at $0.0000026, the highest point on Wednesday. Therefore, I suspect that the token will continue falling.