We have also read that if the supply of a thing like crypto or any other thing decreases, its price automatically increases.

Token burn is something special in the crypto space that is aimed at limiting the supply of cryptocurrency so that excess of them don't exist in circulation. The burning does not automatically improve the value but it creates supply-demand balance that makes the asset scarce and more demand which then improve its market price.

It is true that the burning of these tokens also attract more investors and not that only, it also incentivize existing investors granting them more yield on their investments.