Can $1.7M in token burns help ASTER regain bullish momentum?

After trading within a thin margin, $ASTER finally found an upside footing and flipped the $0.6 resistance into support. In fact, the altcoin rose to a two-week high of $0.169 before retracing.

At the time of writing, $ASTER was trading at around $0.607, marking a 1.05% hike on the daily charts. Over the same window, the altcoin’s trading volume climbed by 49% to $56 million, hinting at renewed market interest.

Aster team burns $1.74 million worth of $ASTER

With Aster-DEX [$ASTER] regaining some upside pressure and defending key levels, the team offered more incentives to the market.

The Aster team has continued to deploy its main deflationary mechanism. According to Onchain Lens, it burned 2.85 million tokens worth $1.74 million.

Source: Onchain Lens

After the same, the cumulative burns rose to 188.87 million tokens, worth approximately $114.6 million or 3.78% of the token supply. Often, token burns reduce token supply. These boost scarcity, a prelude to better price performance.

However, although the team resumed the token burns, they have slowed down significantly on buybacks. For example, Asterlify did not record any major token buybacks over the past month or any buyback over the last 24 hours.

Source: Asterlify

According to Asterlify, the team did not purchase any tokens over the said period and only recorded $106K in fees.

It seems the Aster team has scaled back on token buybacks because the ecosystem is not generating significant revenue. Low revenue means no money to deploy on this front.

With the altcoin having previously relied on buybacks and burns for stability, the slowdown has left it exposed to market pressure.

Why is the market rising though? Can it hold?

Although Aster has slowed down on buybacks, the market and ecosystem demand have recovered significantly. On the ecosystem’s side, Aster recorded positive USD inflows for two consecutive days, after seeing net USD outflows earlier.

Source: Defillama

Over this period, the network saw $22.7 million in USD Inflows. Positive USD inflows are evidence of more capital flowing into the protocol as more users engage.

That’s not all though as on the spot front, buyers also stepped in. Over the last 24 hours, the altcoin saw $5.43 million in Spot outflows compared to $5.07 million in Inflows.

Source: Coinglass

As a result, the Spot Netflow fell 43% to -$358K, extending a week-long trend. This alluded to an uptick in market demand and potentially seller exhaustion.

As a result of this recovering demand, the upside momentum has been gradually strengthening. A look at the MACD indicator seemed to confirm this view too.

Source: TradingView

For instance, the MACD made a bullish crossover and rose to -0.006. Despite the crossover, it still held within the negative zone and pointed to a weak trend.

Likewise, the altcoin also flipped both the 9 and 21-day MAs, indicating strong short-term momentum. These market conditions hinted at the likelihood of $ASTER making some gains.

If demand holds and is boosted by recent token burns, $ASTER will likely hold $0.6 and target a move above $0.64.

Final Summary

• Aster burnt 2.85 million $ASTER worth $1.74 million, extending total burns to 188.87 million $ASTER.
• Aster-dex [$ASTER] hiked to a two-week high, flipping $0.6 resistance to support amid recovering market demand.

Source