- Shiba Inu’s burn rates skyrocket despite a decline in price.
- Burn tokens are sourced from gas fees.
- HODLers who are expecting a rally in SHIB are accumulating.
Despite a minor slowdown in the crypto markets, Shiba Inu’s burn rates have nearly gone 40x as compared to yesterday.
The increase in burn rates could be either a result of increased movement of SHIB, which has been a favorite of whales, or with indicates an increased rate of adoption for SHIB.
Decoding the 40x Burn Rate
The burn rate in SHIB skyrocketed on Jan 04, 2023 by 3963.36%. During this burn period nearly 1.22 million tokens were burnt. The current supply of SHIB is at 589,301,785 million tokens.
Though it seems impossible that going by this rate Shiba Burn would appreciate the price of the token, yet burning contributes in alleviating token prices.
The news was reported by Shibburn on X.com. Shibburn is a portal which tracks the burning of Shiba Inu.
Why Shiba Inu’s Burning is Significant?
Shiba Inu debuted with more than 1 quadrillion or 1000 trillion tokens out of which nearly 400 trillion tokens were burnt by Vitalik Buterin when he received these token. These quadrillion tokens possess a serious challenge.
The price of Shiba Inu is about a million times less than 9 dollars. If at any point of time in the 21st century, Shiba Inu hopes to cross the $1 mark, it has two ways.
One is that everyone in the world ditches all assets, currencies and gold to adopt Shiba Inu as the sole currency and asset in the world. The second option is to reduce its supply.
Burning tokens is helpful in reducing the supply of coins that are in circulation. Since, no one would willingly sacrifice their coins, an optimum way is to burn the coins which is obtained as gas fees.
Shiba Inu burns a portion of the gas fees it gets. Therefore, the more transactions take place on its blockchain, the higher will be its burning rates.
Why Track Burn Rates?
A high burn rate indicates that there has been either high value transactions or increase in low value transactions would only happen if Shiba Inu’s adoption rate increases.
By tracking high value transactions, we can track whale movements and follow them to anticipate bullishness or bearishness in advance.
Even if the transactions are not done by Whales as in this case, the burn transactions by the developers of SHIB shows that there has been a gradual adoption of
Below are the two transactions that burnt the 1.2 million SHIB.
Tracing the two transactions we come to know that both were probably done by the SHIB team. This indicates that these tokens were sourced from gas fees.
The following image shows the one month levels of transaction on Shibarium. We can clearly see that towards the end of December and at the beginning of January, Shiba Inu’s transactions have clearly declined. This could not have been the cause of an increased gas fees.
So from where is the team of SHIB still getting tokens to burn?
The tokens are coming from HODLers who are tracking Shiba Inu’s rally.
Let us take a look in to broader crypto markets. Since the last 1 month, most cryptocurrencies have experienced a decline and liquidations of traders. The overall liquidations stand at $730 million.
However, despite all, SHIB’s price has remained up by about 12%.
Further, SHIB is expected to continue its rally this month too with Bollinger Bands indicating a fresh rally. If you closely take a look at the rightmost part of SHIB’s price graph, you will notice a reversal in price on Jan 02, 2023 which could propel into a further rally.
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