Shiba Inu is highly volatile as its burn rate and Shibarium transaction fees continue to fall.
Shiba Inu (SHIB) retreated to $0.000022, down by 33% from its highest level this month.
At last check Saturday, the Ethereum meme coin was up at least 3.5%. See below.
Why did Shiba Inu retreat?
This retreat is mainly because of the ongoing softness and falling volumes in the cryptocurrency industry.
Shiba Inu’s fundamentals have also deteriorated in the past few days. First, Shibarium’s network is not growing as it did months ago.
According to Shibarium Scan, the number of new accounts on Friday was just 44 — much lower than 3,400 on Dec. 4. The cumulative number of accounts has grown to 222,000, while the active ones have fallen to less than 3,000.
Shibarium’s average transaction fees have continued falling after peaking at 0.0004 earlier this month. Its total value locked has also dropped to $3.55 million from over $6 million on Dec. 7.
These numbers are important for Shiba Inu because Shibarium is its layer-2 network, and its success matters. Also, Shibarium’s fees, which are in form of BONE, are usually converted into SHIB and then burned. Burning is a process where cryptocurrencies are moved into an inaccessible wallet.
These numbers likely explain why Shiba Inu’s burn rate crashed by over 98% in the last 24 hours to 507,123 SHIB. That burn has brought Shiba Inu’s circulating supply to 584 trillion tokens, much lower than its total supply of over 999 trillion.
Shiba Inu could lose key support
The daily chart shows that the SHIB price has dropped sharply after peaking at $0.000033 in December. It has fallen and moved slightly below the 50-day moving average.
There are signs that the coin is forming a bearish pennant chart pattern, which is made up of a vertical line and a triangle. This pattern often leads to more downside.
On the positive side, Shiba Inu remains above the ascending trendline that connects the lowest swings since August. It has failed to move below that level at least six times since then, offering hopes of a rebound.
A drop below that support will be a sign that bears have prevailed, which will lead to more downside, potentially to $0.00001590, its lowest level on Oct. 25.
