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Shiba Inu's Burn Rate Skyrockets, But Why Is SHIB Still Slipping?

Coin WorldMonday, Jan 27, 2025 7:56 am ET

1min read

Shiba Inu's Burn Rate Explodes by 856%, But Why Is SHIB Still Dropping?

Shiba Inu (SHIB) experienced a significant surge in its burn rate, with approximately 6.27 million tokens removed from circulation within 24 hours. This increase of 856% has sparked optimism among investors, despite the meme coin's price dropping in line with the broader cryptocurrency market downturn.

The burn mechanism, designed to decrease the circulating supply by sending tokens to an inaccessible wallet, is often associated with potential price increases based on supply and demand dynamics. However, SHIB's price has not reflected this optimism, trading at $0.00001774 at press time, after an 11% intraday drop.

The broader cryptocurrency market remains under pressure as investors exercise caution ahead of the January 29 Federal Open Market Committee (FOMC) meeting. This bearish trend has extended to meme coins like Shiba Inu, with market participants reflecting a risk-averse sentiment amid rising volatility.

Analysts believe that SHIB's ability to recover in the short term may hinge on the market's response to the outcomes of the FOMC meeting. According to cryptoanalyst Ali Martinez, the $0.0000185 to $0.0000212 range represents a critical support zone for Shiba Inu. SHIB's current price remains below this range, raising concerns among investors.

However, recent whale activity suggests growing interest in the asset at current levels. On-chain data from IntoTheBlock shows a 724% increase in large holder net flows for SHIB over the past week. Positive net flows jumped from -400 billion SHIB on January 21 to 665 billion SHIB on January 22, signaling a potential accumulation phase among whales.

Shiba Inu's marketing lead, LUCIE, assured the community on X that "The Shib Ecosystem is still building strong" despite the market downturn. This statement has added to optimism about upcoming advancements within the ecosystem. Meanwhile, top SHIB holders reportedly accumulated close to 30 trillion tokens, demonstrating confidence in the project's future potential.

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