- SHIB burn rate collapsed, causing its value to plummet.
The cause of this collapse was tied to issues within the Shibarium network.
As a seasoned crypto investor with a knack for understanding the nuances of digital assets, I must admit that Shiba Inu [SHIB] has left me scratching my head lately. The recent collapse in SHIB’s value, coupled with the plummeting burn rate, is a recipe for concern.
As an analyst, I’ve observed that my analysis of Shiba Inu (SHIB) has shown a persistent decline following its initial surge in early March. The memecoin reached a significant resistance level at approximately $0.0000380, but unfortunately, it failed to maintain the momentum for a sustained rally thereafter.
Over the course of early August, the consistent negative trend in the token’s value has driven its price to a fresh support level at approximately $0.00001323.
It’s even more troubling to note that, based on figures from the Shibburn site, the rate at which SHIB tokens are being destroyed has significantly decreased, with just about 261,691 SHIB coins being incinerated in recent times.
Burning Shib tokens regularly is crucial for maintaining the appeal of the Shiba Inu community. But, could these routine burns influence the token’s overall price? Absolutely, they might have some effect on the price in the long run, given the principles of supply and demand.
Shiba Inu’s deflationary model
As a crypto investor, I find that the regular Shiba Inu token burn events are crucial for enhancing scarcity within the network. Any hiccup or delay in this recurring process could potentially diminish the value of my investment.
Yesterday, we saw an impressive 7 million SHIB being torched, but today, that number has significantly dropped to just 261,691. It’s a stark contrast, isn’t it?
Source : Shiba Burn Tracker
Based on AMBCrypto’s examination of the graph, over 28 million Shiba Inu (SHIB) coins were incinerated on August 22nd.
This significant reduction in supply led to an 8% price surge the following day.
In spite of the rise, the Shiba Inu token’s burning rate stayed relatively low. As a result, the token’s price has slowed down, decreasing by approximately 10.5% over the last three days.
Following a 23.32% jump over the past week that peaked at $0.00001610, the current price stands at $0.00001441.
Low transaction activity caused SHIB burn to collapse
According to data from ShibariumScan, weekly SHIB burn figures are more encouraging.
In the past week, there was a staggering 843% surge, as over 114 million Shiba Inu tokens were transferred to accounts that can no longer be used.
Regardless, there’s been a decrease in the pace of activity on the Shibarium layer-2 blockchain. As AMBCrypto points out, the number of new transactions on Shibarium has fallen dramatically.
Source : ShibariumScan
At this moment, there have been a grand total of approximately 418 million transactions processed on Shibarium, and an impressive 1.8 million wallets are currently linked to the network.
On August 20th, there were around 28,000 daily transactions, but this figure dropped significantly by the 23rd to approximately 3,300. There was a modest uptick on the 26th, with 4,000 transactions recorded.
Essentially, if there are less transactions happening on Shibarium, then the number of SHIB tokens being burned due to these transactions may also decrease. This could potentially cause the price of SHIB to fall.
Source : Santiment
On a day characterized by heavy trading activity, it’s noteworthy that the cumulative worth of SHIB tokens transferred, taking into account their holding duration, surpassed $1 trillion.
This highlighted significant selling activity, which contributed to the plunge in SHIB’s value, aside from low SHIB burn rate.
Despite the fact that the sentiment analysis now shows a negative trend, it’s intriguing to note that on the actual day of the incident, the sentiment was, in fact, positive.
Realistic or not, here SHIB’s market cap in BTC’s terms
According to AMBCrypto, determining the price of a memecoin involves a multilayered analysis.
Consequently, although less transactions on the Shibarium network leading to fewer SHIB being burned played a substantial role, it wasn’t the only explanation behind the decline in SHIB value.
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2024-08-28 23:04