Shiba Inu coin price could fall 50% as Shibarium fees, burn rate crash

The Shiba Inu coin price has fallen over 35% from its December highs and faces further downside risk as the burn rate and Shibarium fees continue to decline.

Shiba Inu (SHIB) dropped to $0.00002150 on January 6, joining other popular meme coins such as 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. 8.73 million tokens were burned in the last 24 hours; There was a 71% decrease compared to the previous day.

The 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 dropped to just 1,250; This is a relatively small figure for a network with high popularity.

Additionally, the average transaction fee on Shibarium decreased to 0.00023 BONE from its peak of 0.00045 in December. As a result, the total BONE spent on gas fees dropped to 1,715 BONE, which equates to approximately $771.

Shibarium’s performance is crucial to SHIB’s price because the network plays an important role in token burns. A portion of the BONE fees generated in the Shibarium are converted into SHIB and then burned, reducing the token supply.

Meanwhile, data from Nansen shows smart money investors are reducing their exposure to SHIB. The number of smart money addresses holding SHIB dropped to 25 from around 40 in November. This shift may be due to Shiba Inu’s underperformance compared to other meme coins, causing investors to turn to alternatives such as Fartcoin and ai16z.

Shiba Inu coin price may drop slightly further on SHIB price chart | Source: crypto.news

The daily chart shows that SHIB price may see further declines. The token dropped from $0.000033 in November to $0.00002150 as of today.

SHIB fell below the 50-day and 100-day moving averages. More importantly, it forms a bearish flag chart pattern characterized by a steep downward movement followed by a consolidation phase within a rectangle. This pattern usually precedes a significant downtrend. In this case, SHIB could fall to the next support level at $0.00001082, which would imply a 50% decline from current prices.

On a more optimistic note, there are signs that SHIB is also forming a cup-and-handle formation. If this bullish pattern continues, the recent pullback could be part of the holding section. In this scenario, SHIB could retest the upper limit of the cup before making further gains.