Shiba Inu Burn Rate Declines: Can the Price Recover a 90/ Upsurge?

Shiba Inu, one of the most popular meme coins in the cryptocurrency market, recently experienced a sharp price drop amid a broader crypto sell-off. The token’s value has fallen to $0.000024, marking a 21% decline from its peak earlier this month. This downward trend coincides with a decline in its burn rate, raising concerns about the coin's short-term prospects while keeping long-term recovery hopes alive.

Burn Rate Decline and Supply Reduction

Recent data from Shibburn, a tracking platform for Shiba Inu's token burns, revealed a 30% drop in the burn rate on November 26, with just 3.4 million tokens removed from circulation that day. To date, a staggering 410 trillion tokens have been burned. While this trend highlights ongoing efforts to reduce Shiba Inu’s supply, the burn rate’s recent decline has tempered optimism about its near-term impact on price movements.

Token burns are executed through mechanisms embedded in Shiba Inu’s ecosystem, primarily within Shibarium and ShibaSwap.

Shibarium Activity Insights

Shibarium, Shiba Inu’s layer-2 blockchain solution, has gained significant traction in recent months, further embedding itself as a key player in the ecosystem. According to Shibarium Scan, the network has processed over 561 transactions and expanded its user base to 1.93 million wallet addresses.

However, daily transaction fees on Shibarium have decreased despite growing activity. On November 25, fees amounted to 714 BONE tokens—equivalent to $342—some of which were converted into SHIB and burned. This decline in fees raises questions about the platform’s ability to maintain a consistent burn rate while managing increased network usage.

ShibaSwap: A Key DeFi Component

ShibaSwap, the decentralized exchange (DEX) operating within Shibarium’s ecosystem, continues to support Shiba Inu’s broader DeFi aspirations. The DEX currently boasts $23.2 million in total assets, with recent data from DeFi Llama indicating around 40 active addresses in the past 24 hours.

Additionally, ShibaSwap generated $2.4 million in total annualized fees, reflecting steady usage despite the ongoing market turbulence.

Whale Activity Sparks Sell-Off

Adding to the pressure on Shiba Inu’s price, large holders—commonly referred to as whales—have begun offloading substantial quantities of the token. On November 26, the largest whale transaction involved the sale of $4.8 million worth of SHIB. Two additional whale sales followed, worth $2.2 million and $1.8 million, respectively.

These sales indicate profit-taking by major investors following the token’s recent rally. Such whale activity often exacerbates price declines, given the disproportionate impact of large transactions on market sentiment and liquidity.

Can Shiba Inu Reclaim Its YTD High?

Despite the recent downturn, technical analysis suggests that Shiba Inu could recover and even achieve a 90% price increase, potentially reaching its year-to-date high of $0.000045.

On the daily chart, Shiba Inu has formed a cup and handle pattern, a classic bullish indicator. The pattern’s upper boundary is at $0.000029, with projections based on the cup’s depth indicating a potential rise to $0.000046.

The coin has also developed a bullish pennant pattern, characterized by a sharp upward movement followed by a consolidation phase within a symmetrical triangle. This setup typically precedes a breakout to the upside as the triangle nears its convergence point.

Further reinforcing the bullish outlook, Shiba Inu recently recorded a golden cross, where its 50-day moving average crossed above the 200-day moving average. This technical signal often heralds a sustained uptrend, supporting predictions of a price recovery.

Long-Term Outlook

While Shiba Inu faces immediate challenges, including a decline in its burn rate and the impact of whale sell-offs, its broader ecosystem continues to evolve. Shibarium and ShibaSwap are pivotal components of this ecosystem, driving utility and adoption for the token.

The technical indicators remain promising, suggesting that the current price slump may only be temporary. If the token can capitalize on these bullish patterns, it could not only recover but also surpass its previous highs, reaffirming its position as one of the leading meme coins in the cryptocurrency market.

As the burn rate stabilizes and ecosystem activity grows, Shiba Inu’s potential for a strong rebound remains intact, offering hope to investors and enthusiasts alike.