Shiba Inu Price Faces Risks Amid Falling Burn Rate and Shibarium Fees
Shiba Inu (SHIB) has seen a significant price drop to $0.000022, marking a 33% decrease from its monthly high. Factors contributing to this trend include a substantial decline in burn rate and Shibarium transaction fees, along with a decrease in the growth rate of new accounts. Chart analysis indicates the potential forming of a bearish pennant, implying further declines if critical supports are breached.
Shiba Inu (SHIB), a well-known cryptocurrency, has witnessed significant price volatility, recently experiencing a decline to $0.000022—representing a 33% decrease from its peak this month. Although there was a minor recovery of 3.5% over the latest period, the overall market conditions remain unfavorable. Several factors contribute to this downturn, notably a decrease in both the burn rate and transaction fees associated with Shibarium, its layer-2 network.
The decline in Shiba Inu’s price can be largely attributed to the recent softness in the cryptocurrency sector and diminishing trading volumes. According to metrics from Shibarium Scan, new account creations on Shibarium have dwindled dramatically, falling from 3,400 on December 4 to just 44 recent accounts. Furthermore, the number of active accounts on the network has also decreased significantly to under 3,000, despite a total account count nearing 222,000.
The average transaction fees on Shibarium have continued to decline after reaching a peak of 0.0004 earlier this month, with the total value locked in the network dropping from over $6 million to approximately $3.55 million. Given that Shibarium’s transaction fees, payable in BONE, are generally converted into Shiba Inu tokens for burning, this reduction correlates with a staggering 98% fall in the burn rate to 507,123 SHIB tokens in the last 24 hours. Consequently, the total circulating supply of Shiba Inu now stands at 584 trillion tokens, starkly contrasted against its total supply exceeding 999 trillion.
Charting analysis reveals a concerning trend for Shiba Inu, with prices retreating below the critical 50-day moving average. Additionally, the coin shows signs of forming a bearish pennant chart formation, which often suggests further downside potential. However, it is noteworthy that Shiba Inu maintains its position above an ascending trendline that has supported the price since August, having withstood descents below that level on multiple occasions. Should Shiba Inu break beneath this support, it may signal a bearish trend, potentially leading prices to decline toward $0.00001590, a level last seen on October 25.
Shiba Inu, often recognized as a meme coin within the cryptocurrency market, has gained attention for its rapid price fluctuations and community-driven initiatives. Central to its ecosystem is Shibarium, a layer-2 scaling solution that aims to enhance transaction efficiency and lower fees for users. The dynamics of account creation, transaction fees, and the associated burn mechanisms are critical factors influencing the supply and demand of SHIB, thus affecting its price stability and market performance. This article discusses the challenges faced by Shiba Inu as key indicators relating to Shibarium’s effectiveness show signs of deterioration.
In conclusion, Shiba Inu’s price vulnerability is evident due to declining burn rates and transaction fees linked to its Shibarium network. The recent drop in new and active accounts, alongside significant reductions in transaction values, underscores potential future pressures on SHIB’s pricing. Without renewed engagement and utilization of the Shibarium platform, Shiba Inu may face additional declines, testing critical support levels in the coming weeks.
Original Source: crypto.news
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