Shiba Inu coin price has collapsed more than 35% from its December high and faces further downside risks as Shibarium burn rate and fees continue to decline.
Shiba Inu (SHIB) retreated to $0.00002150 on January 6, joining other popular meme coins like Dogecoin (DOGE), Pepe (PEPE), and Fartcoin.
According to Shibburn, SHIB’s burn rate has continued to decline, which could negatively impact the token’s performance in the near term. Over the past 24 hours, 8.73 million tokens were burned, a 71% decrease from the previous day.
A likely reason for this significant decline is the poor performance of the Shibarium ecosystem. Data from ShibariumStats shows that the number of active accounts on the network has fallen to just 1,250, a relatively low number for a very popular network.
Additionally, the average transaction fee on Shibarium decreased to 0.00023 BONE, down from December’s high of 0.00045. As a result, the total BONE spent on gas fees fell to 1,715 BONE, the equivalent of approximately $771.
Shibarium’s performance is crucial to the price of SHIB as the network plays a key role in token burning. A portion of the BONE fees generated on Shibarium are converted to SHIB and then burned, thereby reducing the token supply.
Meanwhile, Nansen’s data shows that smart investors are reducing their exposure to SHIB. The number of smart money addresses holding SHIB has fallen to 25, down from nearly 40 in November. This change may be due to Shiba Inu’s underperformance compared to other meme coins, prompting investors to turn to alternatives like Fartcoin and ai16z.
Shiba Inu Coin Price Could Plunge Again
The daily chart indicates that SHIB price may see further declines. The token has fallen from a high of $0.000033 in November to $0.00002150 as of today.
SHIB has fallen below the 50 and 100 day moving averages. More importantly, it forms a bear flag chart pattern, characterized by a steep downward movement followed by a consolidation phase in a rectangle. This trend often precedes a significant bearish breakout. In this case, SHIB could move to the next support level at $0.00001082, which would represent a 50% decline from current prices.
On a more optimistic note, there are signs that SHIB also forms a cup and handle pattern. If this uptrend continues, the recent pullback could be part of the handle section. In this scenario, SHIB could retest the upper limit of the cup before embarking on further gains.
