Shiba Inu Price Under Pressure as Burn Rate and Shibarium Fees Decline

The Shiba Inu price has come under pressure, retreating to $0.000022 after a 33% drop from its recent high earlier this month. Despite a brief recovery of 3.5% over the weekend, the meme coin is struggling to maintain upward momentum as key metrics deteriorate.

Shiba Inu Faces Declining Fundamentals

Shiba Inu’s recent retreat has been fueled by the ongoing decline in cryptocurrency trading volumes and a marked drop in its key fundamentals. Most notably, Shibarium, Shiba Inu’s layer-2 network, is showing signs of stagnation.

Shibarium was initially hailed as a critical component of Shiba Inu’s ecosystem, designed to bolster transaction efficiency and reduce fees. However, recent data from Shibarium Scan reveals a steep decline in network activity. The number of new accounts created on Friday plummeted to just 44, a stark contrast to the 3,400 new accounts recorded on December 4.

Active accounts on the Shibarium network have also dropped significantly, falling below 3,000. Additionally, Shibarium’s average transaction fees, which peaked at 0.0004 BONE earlier this month, have continued to decline, dragging its total value locked (TVL) down to $3.55 million—a sharp drop from over $6 million on December 7.

Shiba Inu Burn Rate Plummets

The decline in Shibarium activity has had a direct impact on Shiba Inu’s burn rate, a process that reduces the circulating supply of SHIB tokens by transferring them to inaccessible wallets. Over the past 24 hours, Shiba Inu’s burn rate has plunged by more than 98%, with only 507,123 SHIB burned during this period.

This sharp drop in the burn rate has raised concerns about Shiba Inu’s ability to sustain its long-term price trajectory. As of now, Shiba Inu’s circulating supply stands at 584 trillion tokens, significantly below its total supply of over 999 trillion.

Technical Analysis: Bearish Signals Emerge

The daily chart paints a challenging picture for the Shiba Inu price. After peaking at $0.000033 in December, the token has fallen below its 50-day moving average, a critical indicator of short-term price trends.

Adding to bearish concerns is the emergence of a pennant chart pattern, characterized by a vertical decline followed by a consolidation phase in the form of a triangle. This pattern often signals further downside.

However, there is a silver lining. Shiba Inu has remained above the ascending trendline connecting its lowest swings since August. This support level has held firm on six separate occasions, sparking hope among some analysts that the coin could stage a rebound.

“If Shiba Inu fails to break below this trendline, it could see a short-term rally,” said crypto analyst David Chen. “But if it does fall, the next support level is likely around $0.00001590, which was last seen in October.”

Broader Market Weakness Weighs on Shiba Inu

Shiba Inu’s struggles come against the backdrop of a broader slowdown in the cryptocurrency market. Falling trading volumes and reduced investor appetite for speculative assets have created a challenging environment for meme coins like Shiba Inu.

“The cryptocurrency market is undergoing a period of consolidation as investors shift focus to macroeconomic developments,” said Sarah Li, a blockchain strategist at Digital Asset Research. “Shiba Inu’s price is particularly sensitive to sentiment-driven factors, and its fundamentals need to improve for sustained recovery.”

Can Shibarium Revive Shiba Inu’s Fortunes?

The success of Shibarium remains a critical factor for the future of the Shiba Inu price. As a layer-2 network, Shibarium was designed to reduce transaction costs and increase the utility of the Shiba Inu ecosystem. Its fees, denominated in BONE, are converted to SHIB and burned—a mechanism that has historically supported SHIB’s price by reducing its supply.

However, with falling transaction volumes and declining TVL, the network’s potential to drive demand for SHIB is being questioned.

“The Shibarium network needs to regain its growth momentum to positively impact the Shiba Inu price,” said blockchain developer Mark Townsend. “A sustained increase in accounts, transactions, and TVL could reignite interest in SHIB.”

For Shiba Inu to recover, it will need a combination of improved market sentiment and stronger fundamentals. While the ascending trendline offers a glimmer of hope, a failure to hold this support could lead to further downside.

The coming weeks will be crucial for Shiba Inu price as investors watch for signs of a turnaround in Shibarium’s performance. Without a recovery in its burn rate and transaction volumes, the token may struggle to regain its footing in the competitive cryptocurrency market.

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