Shiba Inu Faces Decline as Burn Rate and Shibarium Fees Drop

Shiba Inu (SHIB) has seen a sharp decline in price recently, retreating to $0.000022, a 33% drop from its highest level this month. This dip in price is attributed to both the softening of the broader cryptocurrency market and internal factors, including the falling burn rate and decreased Shibarium transaction fees.

Shiba Inu’s burn rate, a process where tokens are sent to an inaccessible wallet to reduce the circulating supply, has plummeted by over 98% in the last 24 hours, dropping to only 507,123 SHIB. This marks a significant drop from the peak levels seen earlier in December. Additionally, the Shibarium network, which is SHIB’s layer-2 solution, is struggling. New accounts on Shibarium dropped to just 44 on Friday, compared to 3,400 accounts earlier in the month. Furthermore, the total value locked in Shibarium has fallen to $3.55 million, down from $6 million in early December.

These factors are important for Shiba Inu because Shibarium’s fees, which are paid in BONE, are typically converted into SHIB and burned to reduce supply. The sharp decline in both the burn rate and transaction volumes signals weakening demand, which has put downward pressure on the token’s price.

Technical indicators also paint a bearish picture. The SHIB price has fallen below its 50-day moving average and is showing signs of forming a bearish pennant chart pattern, often an indication of further price declines. However, there is still some support for SHIB, with the coin holding above an ascending trendline that has been in place since August. If this support level breaks, SHIB could face a further drop, potentially reaching $0.00001590, its lowest level in October.

The future of Shiba Inu largely depends on the recovery of Shibarium’s network and burn rate. If these metrics continue to decline, SHIB could see more significant losses in the coming weeks.