The Shiba Inu team intends to rigorously expand the token burn. In the event of a token burn, the coins are destroyed forever, reducing the available supply. The Shib Army hopes this will help the Shiba Ina price recover from current price levels. But will that really happen?
Even though memecoins are notorious for massive price crashes, some of them remain a niche crypto product with great potential. There are several exciting developments happening in the Shiba Inu ecosystem, the second largest memecoin (by market cap). Will these developments push the Shiba Inu price into a new bullish rally?
Does the Shiba Inu Price Rise Because of the Burn Mechanism?
Ever since the Shiba Inu price gained 45% in just 4 days on August 15, 2022, SHIB hodlers began dreaming strongly about past price gains again . The aggressive token burn campaign announced last week by Shiba Inu founder Shytoshi Kusama could actually make the dreams of the SHIB community come true.
As of September 22, more than 410 trillion Shiba Inu tokens have been burned from the previously available SHIB supply. This corresponds to more than 41% of the original offer.
In the last 24 hours alone (at the time of publication of the article), 11.7 million SHIB tokens were destroyed forever in three transactions, according to Shib Burn data.
In addition, September 21 saw a notable increase in the token burn rate. On this day, a large amount of SHIB tokens were sent to an unusable wallet. This caused the burn rate to increase by 1,500% in the short term. However, as of press time, the burn rate has fallen again by 83%
Since the available Shiba Inu supply decreases significantly in the long term due to burning, the price should theoretically increase in the long term. But what is happening on the demand side?
Is SHIB demand increasing?
If demand continues to increase, along with the supply reduction, we could actually see bullish implications for the SHIB price. In addition, according to network indicators, the burning mechanism seems to have a positive impact on demand. In the last week, the number of active addresses increased by 1.85%. On average, 1,600 new addresses have been created in the Shiba Inu network every day since the beginning of September.
However, apart from some spikes in August 2022, when over 4,000 new addresses were created in one day, there was no massive increase in retail addresses.
The euphoria of small investors has had a positive effect on the Shiba Inu price so far, as can be seen in the chart below. Together with the price rallies in October 2021 and February 2022, the number of SHIB addresses also reached new record levels.
At the time the article was published, the Shiba Inu price was hovering around the $0.00001078 mark with a daily gain of 3.04%. Even if the SHIB price could rise in the long term, the Shiba price currently seems to be more or less dependent on the general crypto market.
In addition, supply and demand data shows that the SHIB price has yet to break through a few crucial price levels before the price can rise over the long term.
According to Into The Block's Global In and Out of Money indicator, the next major supply barrier for SHIB is $0.000017, which has 105,000 addresses holding over 450 trillion tokens. Only when the bulls succeed in pushing the price above the supply barrier at 0.000017 US dollars will there be the necessary scope for further price increases.
Additionally, data from IntoTheBlock shows that as of press time, more than 75% of HODLers were “out of the money” or making a loss.
So far, the SHIB price has successfully held above the long-term support at $0.00001050. If this level doesn't hold, we may even see further declines.
So, in the short and medium term, we still have to expect prices to fall. Nevertheless, the following conclusion can be drawn from this analysis: The supply-demand dynamics may have a positive effect on the Shiba Inu price in the long term.
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