Shiba Inu tokens are being burned by community members on a daily basis, leading to a fluctuating burn rate. Interestingly, on certain days, the burn rate deviates significantly, often in denominations of thousands.
Surprisingly, despite these ongoing burn events, the price of SHIB has not demonstrated an immediate and noticeable reaction.
Exploring the Supply-burn Relationship
Despite the regular burning of tokens, which involves sending them to a dead wallet address and subsequently removing them from the circulating supply, the expected decrease in supply has not been consistently observed with Shiba Inu tokens. Data from Messari reveals that the circulating supply of Shiba Inu has remained relatively stable since June of the previous year.
The recorded change has been minimal, with only a slight deviation from 589.40 trillion to 589.34 trillion. As a result, the overall trend of the circulating supply curve appears to be nearly flat.
It is crucial to acknowledge the relationship between the circulating market cap and the price of SHIB, which can be defined as Circulating Market Cap = Price of SHIB x Circulating Supply. As previously discussed, the circulating supply of SHIB has remained relatively unchanged over the past year. Consequently, the drop in the circulating market cap can mostly be attributed to the decline in the price of Shiba Inu.
This observation is further supported by the circulating market cap chart, where the drop (indicated in blue) aligns precisely with the price (indicated in white). This reiterates the notion that the price plays a more significant role in balancing the right-hand side of the equation, compared to the relatively constant circulating supply. Consequently, it subtly suggests that the impact of SHIB burns on the asset’s price is negligible.
SHIB’s Price Movement
Since mid-April, SHIB has been experiencing a downward trend in its price. Despite several attempts to break above the resistance of the downtrend line, each effort has been met with rejection. However, after three consecutive days of positive price movement represented by green candles, SHIB is once again approaching this resistance level.
For SHIB to make further progress, it needs to successfully break above this resistance and establish it as a new support level. This breakthrough would enable SHIB to remove another zero from its price and potentially move towards the psychologically significant mark of $0.00001.
As of now, SHIB is trading at $0.00000882, which means it has five zeros before the first non-zero digit. The current price reflects a minor increase of 0.1% over the course of the day.