- Shibburn recently initiated a massive burn of 20 million Shiba Inu (SHIB), significantly reducing the circulating supply of the token.
- Will this burning mechanism be able to sustainably drive the price upwards?
According to on-chain data tracker Shibburn, a substantial 20,000,000 SHIB burn transaction was reported, which effectively decreased the circulating supply of the token. An anonymous whale executed a burn as part of today’s 20.79 million SHIB burn, leading to a 34.24% increase in the daily burn rate. Token burning is a crucial aspect of SHIB’s tokenomics, aiming to create deflationary pressure and potentially enhance its value over time. Despite these burns, SHIB’s price remains volatile, currently down by 60% from its post-election high of $0.00003340.
Source: TradingView (SHIB/USDT)
The efficacy of its deflationary strategy is a topic of debate. While regular burns help reduce the circulating supply by locking tokens in dead wallets, SHIB still grapples with the challenge of its vast circulating supply of 589.25 trillion tokens. For instance, on the 23rd of February, 40.45 million SHIB tokens were burned, yet the very next day, SHIB experienced an 11% dip, reflecting Bitcoin’s 4.5% drop.
Source: Shiba Burn Tracker
Shiba Inu: Can this burn drive long-term value?
SHIB’s price is not solely influenced by its circulating supply but also by social media hype, investor behavior, and market conditions. Currently, SHIB’s Social Volume has hit a three-month low, mirroring its price decline. A decrease in engagement often indicates a waning market interest, making it challenging for SHIB to rally without renewed attention. Moreover, the trading volume, once soaring above $4 billion during the election hype, has now plummeted to just $311.44 million.
Source: Santiment
This significant drop in volume signifies a lack of market participation. If social momentum and buying pressure do not pick up soon, SHIB may remain ensnared in its current bearish trend.
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