Shiba Inu Burn Rate Soars Despite Price Drop and Network Decline

Weekly SHIB burn supply surges nearly 4X; SHIB network activity plummets with fewer new users. Over 24 million Shiba Inu [SHIB] tokens have been removed from circulation in the past 24 hours as the second-largest meme coin continues to witness high burn activity.

Shiba Inu Incineration Soars, But Price Suffers Amidst Declining Network Activity

Shiba Inu (SHIB), the second-largest meme cryptocurrency, has witnessed a significant surge in its weekly burn rate, with over 24 million tokens removed from circulation within the past 24 hours. However, this amplified burning activity has not translated into price appreciation, as SHIB continues to face challenges in attracting new users and sustaining network growth.

Accelerated Token Incineration

According to the latest update from X (formerly known as Twitter), the burn rate for SHIB has skyrocketed by over 90% compared to the previous day. A staggering 798 million tokens have been sent to the burn address this week, marking a near-fourfold increase from the previous week's burn rate.

Token burning involves permanently removing coins from circulation, thereby reducing the overall supply. This strategy aims to increase the scarcity of the remaining tokens, potentially driving up their value over the long term. However, in SHIB's case, the increased burn rate has not spurred immediate price gains.

Price Disconnect from Burning Activity

Despite the impressive burning activity, SHIB's price has taken a downturn, falling by over 20% in the past week, as per CoinMarketCap. This divergence between the burn rate and price performance suggests that demand for SHIB remains relatively weak at the time of writing.

Declining Network Activity

The price drop coincides with a noticeable decline in SHIB's network activity. Santiment data analyzed by AMBCrypto indicates that the number of unique addresses interacting with the SHIB blockchain has plummeted by over 50% within the past week, signaling a loss of interest in the network.

Furthermore, the rate of new address creation has slowed significantly, with only about 862 new addresses created on April 17th, less than half the number witnessed a week prior. The low rate of network growth implies a lack of sufficient traction for the asset.

Derivative Market Sentiment Wanes

The price dip has also led to a reduction in speculative interest in SHIB. Data from Coinglass shows that the open interest (OI), or the amount of money locked in unsettled SHIB futures contracts, has fallen by 38% over the past week and over 55% since the beginning of the month.

This suggests that a majority of derivatives traders are bearish on SHIB, as the Long/Short Ratio remains below 1 at the time of writing.

Conclusion

While the heightened burn rate for SHIB is a positive indicator for the long-term value of the asset, the current price disconnect and declining network activity pose challenges for SHIB. The asset needs to attract new users and stimulate demand in order to sustain its growth trajectory. If these issues remain unaddressed, SHIB may struggle to regain its former momentum and challenge the market dominance of leading cryptocurrencies.