SHIB Burns 798M Tokens, Price Falls 20% Amid Decreased Interest
The Essentials in Brief
The cryptocurrency Shiba Inu has burned a massive amount of 798 million tokens in the last 24 hours, which is almost four times the amount of the previous week. Despite this impressive number, the price of SHIB has fallen by 20% in the same time, raising questions about demand and future price development. Additionally, an analysis of on-chain activities and the derivatives market shows a declining interest in SHIB.
Token Burning and Price Development
The practice of token burning is widespread in the crypto community as it aims to reduce the supply and potentially increase the value of the remaining tokens. In the case of Shiba Inu, 798 million tokens were burned in the past week, a significant increase from the previous week. Although this is usually seen as positive for the price, the value of SHIB fell by 20%, suggesting that demand could not keep up with the reduced supply.
Network Activity and User Interest
The on-chain data of Shiba Inu shows a clear decline in network activity. The number of unique addresses conducting SHIB transactions dropped by more than 50%, and the rate of newly created addresses almost halved. This data suggests that interest in SHIB is decreasing, which could negatively impact the price.
Derivative Markets and Speculative Interest
Despite the price drop, the derivative market for Shiba Inu shows that most traders still take a bullish stance. The open interest, i.e., the money tied up in open SHIB futures contracts, did drop by 38% within a week, but the ratio of long to short positions remains above 1. This suggests that some speculators still hope for a positive price development.
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Our Assessment
The recent token burning by Shiba Inu shows that the project is actively taking measures to increase the value of its cryptocurrency. However, the current price development and the declining interest of users present a challenge for SHIB. It remains to be seen whether future burnings and possible positive developments in the network can revive interest and the price of SHIB. For investors, it is important to keep an eye on market sentiment, user growth, and on-chain activities to make informed decisions.
Sources: Santiment, Coinglass
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