Shiba Inu coin price has crashed by over 35% from its December high and faces further downside risks as the burn rate and Shibarium 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 decrease, which could negatively impact the token’s performance in the near term. In the last 24 hours, 8.73 million tokens were burned — a 71% drop from the previous day.
A likely reason for this significant drop is the weak 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 small figure for a network with high popularity.
Additionally, the average transaction fee on Shibarium has declined to 0.00023 BONE, down from December’s peak of 0.00045. As a result, the total BONE spent on gas fees has dropped to 1,715 BONE, equivalent to around $771.
Shibarium’s performance is crucial for SHIB’s price because the network plays a key role in token burns. A portion of the BONE fees generated on Shibarium is converted into SHIB and then burned, reducing the token supply.
Meanwhile, data from Nansen shows that smart money 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 shift may be due to Shiba Inu’s underperformance compared to other meme coins, prompting investors to pivot to alternatives like Fartcoin and ai16z.
Shiba Inu coin price could plunge some more
The daily chart indicates that SHIB’s price could see further declines. The token has fallen from a high of $0.000033 in November to $0.00002150 as of today.
SHIB has broken below the 50-day and 100-day moving averages. More importantly, it is forming a bearish flag chart pattern, characterized by a steep downward move followed by a consolidation phase within a rectangle. This pattern often precedes a significant bearish breakout. In this case, SHIB could drop to the next support level at $0.00001082, which would be a 50% decline from current prices.
On a more optimistic note, there are signs that SHIB is also forming a cup-and-handle pattern. If this bullish pattern plays out, the recent pullback may be part of the handle section. In that scenario, SHIB could retest the upper boundary of the cup before embarking on further gains.
