On Monday, the Stellar Development Foundation announced that it burned more than half of the Lumens in circulation. Supply went from around 105 billion to 50 billion. From a basic supply and demand standpoint, the reduction of coins in circulation should be extremely bullish for the cryptocurrency.
However, the crypto token is not reacting as expected. While Stellar posted gains of 10% Tuesday, it eventually succumbed to profit-taking. Those who bought the rally are very likely sitting on significant losses.
A closer look at Stellar’s chart reveals that most of the traders who bought Tuesday were whipsawed. The fear of missing out (FOMO) likely drove them to smash the buy button as they expected the cryptocurrency to sharply rise due to the supply halving of the supply. However, the rally quickly faded as interest in the cryptocurrency dropped.