Shiba Inu’s Burn Rate Turned Negative, Does it Matter? Price Might Cross $0.00001

Key Insights:

• Negative burn rates due to inconsistency of manual burns.
• Does not impact price.
• Burn rates essential for Shiba Inu but nor mandatory.
• Price moves up with a breakout.

Shiba Inu's burn rate turned negative recently on Feb 13, 2024. This was contrary to its previous burn rates when these rates used to be very high.

However, there is no concern as the negative burn rate only means that the burns have slowed down . This was expected as the token burns are being executed manually. Automated burns are scheduled to start but they have not been implemented yet.

Is This a Matter of Concern?

No, because negative burn rates only mean token burns have slowed down.

As of now the burn rate in Shiba Inu is being executed manually, mostly when network activity gets high. This means that from time to time, the developmental team has to burn tokens by sending them to null addresses.

Sometimes this is not regular. In such times, there might appear situations like the current one where burn rate might dip too much.

This is why the data for the rate of burn came as negative. This should not be confused with negative burns which would imply towards an increase in the token supply.

What Happened to Automated Burns?

Automated burns are a process where the Shibarium developmental team would not have to manually send tokens to burn addresses. A portion of gas fee would automatically be sent to burn addresses.

Though, there is a will by Shiba Inu's team to automate burns, yet, they have not been implemented. This automated burn mechanism has been tested only on the test net of Shibarium, called the Puppy Net.

A test on PuppyNet is required because this allows a sandbox-like feature where mistakes would not result in fatal errors. Thorough testing ensures that no error occurs. Erroneous burns might destroy the essential funds required to sustain the Shibarium blockchain.

#NOTE: In Proof of Stake blockchains, tokens are used to secure voting and transaction validation rights.

Also, if error in burns sends tokens to the wrong address, then these tokens might re-enter the circulation, making the total concept of burning, useless.

Why Burn Rate Matters for Shiba Inu?

Shiba Inu debuted with almost 1000 trillion(a quadrillion) in coin supply and a price of $0.000000000056.

The team then sent 50% of the token supply to Vitalik Buterin who ended up burning around 410 trillion Shiba Inu.

As per Vitalik, he did not wanted to have a controlling power over the cryptocurrency. Owning that high share of the token supply would have granted him power to create bull and bear phases in Shiba Inu based on his will alone.

The burn by Vitalik Buterin immediately sent the price from $0.0000014 to $0.00003. This was a gain of 21x with a single burn.

Now, initially this crypto was meant to be a joke but when the Shiba Inu team realized that it could be a serious contender in the crypto markets, they found the best way ahead was to burn its token supply.

However, with most of the Shiba Inu existing on another blockchain (Ethereum), earlier burns were mere gestures. That changed when Shibarium was launched. Now, a portion of gas fees which was generated from Shibarium blockchain could be burnt.

Not surprisingly, the burn rate increased and it was also celebrated by the community. Still, it remains very low. A few billion tokens burnt on a daily basis does not contribute much when the circulating supply is around 588 trillion Shiba Inu.

Hopefully, improvement in the burn protocols like the automated burning would be introduced in the future and will contribute to significant burn levels.

Shiba Inu Price Analysis

As we mentioned earlier, the current burn mechanism and rates have only minimal impact on the token price. Hence, the dip in the burn rate had no impact either.

The daily charts of Shiba Inu shows that it has shown a positive breakout where it broke out of a falling channel.

#NOTE: A falling channel is a chart pattern where the price gradually drops down as if it is stuck inside a channel.

We expect a higher price movement because both MACD and RSI are indicating towards a stronger price momentum. In a bull market, such indications prove fairly accurate for upwards price movement. Now, since the breakout is a positive price movement, it is likely to sustain.

We expect the price of Shiba Inu to reach $0.000012, which is the next major resistance. A stoploss should be placed at $0.000009, its nearest support.

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.