Shiba Inu's Burn Boom Fails to Solve Trillion-Token Trap

Shiba Inu’s native token, SHIB, is experiencing renewed interest following a substantial increase in its token burn rate and a recent listing on Folks Finance, a cross-chain DeFi lending platform. In the past 24 hours, SHIB's burn rate surged by 542.4%, with 455,390 tokens removed from circulation [1]. This burn mechanism, designed to reduce SHIB's massive supply—over one quadrillion tokens at launch—has been a core strategy to drive scarcity and potentially elevate the token’s price. As of the latest data, SHIB is trading at $0.00001248, with a market cap of $7.4 billion [2].

Shiba Inu’s token burn mechanism has evolved significantly since its inception. The Shibarium Layer-2 network, which automates the process of burning tokens, now accounts for a large portion of SHIB’s destruction. After an update in August 2024, 70% of the network’s base transaction fees are used to buy SHIB tokens, which are subsequently sent to a "burn address" where they are permanently removed from circulation [1]. Despite this, critics argue that the scale of daily burns—measured in millions rather than trillions—has had a minimal impact on the token’s overall supply [1]. To meaningfully affect the circulating supply and drive price appreciation, the burn rate would need to be significantly higher, a challenge given SHIB’s massive initial issuance.

The Shiba Inu community, often referred to as the SHIB Army, remains a powerful force in the project’s ecosystem. The community’s coordinated buying activity has historically provided a support floor for SHIB’s price and amplified bullish momentum during periods of optimism. This influence was evident in August 2025 when SHIB gained 2% following its listing on Folks Finance, marking its debut as a cross-chain DeFi asset. Folks Finance’s integration of SHIB, powered by Chainlink CCIP, allows the token to be deposited and borrowed across multiple blockchains via a unified liquidity pool, with incentive rewards offered to boost participation [2].

Despite these developments, the path to meaningful price growth for SHIB is fraught with structural challenges. SHIB's total supply of 589 trillion tokens remains a significant hurdle. For the token to reach $0.01, its market cap would need to exceed $5.89 trillion—a valuation that is not only unattainable under current market conditions but also unrealistic in the broader context of global finance and cryptocurrency markets [1]. Skeptics argue that the token's valuation is inherently limited by the speculative nature of the crypto market and its dependence on macroeconomic factors such as interest rates and investor sentiment. On-chain data from Santiment shows that the top ten SHIB wallets control 62.3% of the supply, raising concerns about market manipulation and concentration [2].

The project’s broader ecosystem, including Shibarium and its associated tokens BONE and LEASH, is also under scrutiny. Shibarium, which was once seen as a potential differentiator for SHIB, recently experienced a dramatic drop in activity. Daily transactions fell from an average of 4 million in early August to just 10,000 by August 29, a decline of 99.75% [4]. This collapse has raised questions about the network’s long-term utility and adoption potential. Additionally, the token’s burn rate has slowed to a crawl, dropping 80.32% in the last 24 hours, with only 220,504 SHIB burned [4]. These developments highlight the fragility of SHIB’s growth narrative, even as its community continues to rally behind the project.

In the broader financial landscape, Shiba Inu is inching closer to mainstream recognition. Valour, a leading ETP issuer, recently launched a SEK-denominated exchange-traded product (ETP) tied to SHIB on Sweden’s Spotlight Stock Market. This offering allows Nordic investors to gain exposure to SHIB via traditional brokerage accounts like Avanza and Nordnet, eliminating the need for crypto-specific infrastructure [6]. The ETP mirrors the price performance of SHIB and comes with a 1.9% management fee. For the Shiba Inu community, this represents a significant milestone in the project’s journey toward institutional adoption, bridging the gap between crypto and traditional finance.

However, the path to a U.S. spot ETF for SHIB remains uncertain. While the SEC has recently shown openness to crypto ETFs following approvals for Bitcoin and Ethereum, SHIB lacks a CME-regulated futures market—a requirement that has historically been a prerequisite for such products. This regulatory gap poses a significant obstacle to broader institutional adoption in the U.S., where large investors play a pivotal role in market dynamics [7]. Despite these challenges, the European ETP offering underscores growing demand for regulated crypto products and positions SHIB as a digital asset with increasing legitimacy.

SHIB’s performance in the coming months will likely be shaped by a combination of technical developments, regulatory shifts, and community-driven momentum. While the token burn rate and ecosystem expansion have provided some upward impetus, the structural challenges of supply and market cap remain formidable. For now, SHIB continues to trade around its 99-day simple moving average (SMA), with technical analysts like Javon Marks suggesting a potential 163% surge into the $0.00003s if bullish patterns on the MACD histogram hold [2]. However, such projections should be treated with caution, as the token’s price remains highly sensitive to broader market sentiment and macroeconomic conditions.

Source: [1] Shiba Inu projections - Why SHIB could soon hit a price of ... (https://eng.ambcrypto.com/shiba-inu-projections-why-shib-could-soon-hit-a-price-of-0-01/) [2] Shiba Inu Jumps 2%: What Is Going On? - Yahoo Finance (https://finance.yahoo.com/news/shiba-inu-jumps-2-going-171943337.html) [4] Shiba Inu's Shibarium crashes 99.7%, burn rate plunges 80% (https://www.thestreet.com/crypto/markets/shiba-inus-layer-2-shibarium-crashes-99-9-faces-major-setback) [6] Valour's New Shiba Inu ETP Brings Regulated Crypto Exposure to Europe (https://blockonomi.com/valours-new-shiba-inu-etp-brings-regulated-crypto-exposure-to-europe/) [7] Valour Launches New Shiba Inu ETP in Europe (https://thecryptobasic.com/2025/08/29/valour-launches-new-shiba-inu-etp-in-europe/)