As an analyst with over two decades of experience in the crypto market, I must admit that I find myself quite perplexed by Shiba Inu’s recent burn rate decline. Given its transition to an automated burn mechanism on Shibarium, I had high expectations for a significant increase in the number of tokens burnt daily. However, it seems that the network activity and transaction fees have not been sufficient to sustain this optimistic outlook.
1. The rate at which Shiba Inu (SHIB) tokens are being destroyed has dropped once more, and over the past 24 hours, fewer coins were burned. This trend suggests a bearish outlook for the meme cryptocurrency. Since the beginning of the year, the burn rate of Shiba Inu has been inconsistent, with no clear factor to keep the daily burn of a substantial number of tokens steady.
Shiba Inu’s Burn Rate Declines By 100%
According to data from Shibburn, the rate at which Shiba Inu tokens are being destroyed has dropped more than 100% in the past day, as no tokens were burned during that period. Remarkably, no Shiba Inu tokens have been incinerated for the last three days, with the most recent burn happening on August 13, when 802,246 Shiba Inu tokens were eliminated.
New data indicates that the weekly burn rate for Shiba Inu has dropped by more than 62%, with approximately 42.9 million SHIB being burned in the last week. This decrease in Shiba Inu’s burn rate follows the recent transition of Shibarium to an automated burning mechanism. The system now automatically converts 70% of base transaction fees generated on the layer-2 network into SHIB and destroys it.
The shift towards an automatic burning system in Shiba Inu was believed to boost its daily burn rate and potentially increase the number of tokens destroyed each day, but this hasn’t happened yet. A possible reason could be that the earnings from transaction fees on the Shibarium network are insufficient to cover the costs of daily automated token burns.
Over the past few months, there’s been a noticeable drop in the level of activity within Shibarium’s network. Analysis from Shibariumscan reveals that daily transactions on their layer-2 platform have remained relatively stable and have fluctuated between 3,000 and 8,000 over the last month. The busiest day during this period was August 1, when a total of 8,630 transactions were processed.
From my perspective as an analyst, it’s evident that transaction fees on this network have significantly decreased compared to what was typically recorded by layer-2 networks, particularly when they averaged approximately 5 million transactions per day in December 2023. For example, Shibarium generated 6.8 BONE worth around $2 in transaction fees on August 15 alone. Given this reduction in transaction fees, it’s not surprising that the team might be cautious about implementing automated daily burns.
On-Chain Metrics Also Paint A Bearish Picture
The analysis of Shiba Inu’s on-chain data suggests a bearish outlook for the meme cryptocurrency, as there’s been a general decrease in various aspects. Information from market intelligence platform IntoTheBlock reveals that transactions by significant Shiba Inu holders (SHIB whales) have dropped by more than 14%, implying reduced enthusiasm among these large investors.
The proportion of Shiba Inu owners now profiting from their investment has fallen to 45%, while many are currently carrying a loss. Simultaneously, the overall expansion of the network is stagnating because fewer newcomers are joining the Shiba Inu community.
Currently, as I’m typing this, Shiba Inu coins are being exchanged for approximately 0.00001338 USD each. Over the past 24 hours, there has been a nearly 2% decrease in its value, based on information from CoinMarketCap.
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2024-08-17 04:11