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Shiba Inu fails to rally despite 22 billion tokens being burned

Shiba Inu
Shiba Inu

The Shiba Inu memecoin has increased its burn rate over the past few weeks. A SHIB burn tracker recently showed that 22.2 billion SHIB tokens had been burned. The tokens were burned through 497 different transactions.

Over 22 billion SHIB tokens burned

Developers of the Shiba Inu memecoin teamed up with Ryoshi Vision to set up a burning mechanism dubbed Shiburn. The mechanism rewards community members who burn SHIB tokens by transacting on the ShibaSwap exchange.

The current burn rate for this mechanism stands at 43.73% during the past 24 hours, where over 410 trillion SHIB tokens have been burned from the initial supply of these tokens. Cryptocurrency burning is a popular concept involving sending part of the existing supply to a burn wallet address, known as a “dead wallet.” The burned tokens are removed from circulation.

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Dead wallets cannot be accessed because the private keys are unknown. Therefore, cryptocurrencies that are set to these addresses cannot be retrieved. Burns are usually done by the community seeking to support the growth of a project.

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The Terraform Labs community recently proposed burning LUNA tokens following the collapse of the US stablecoin. Currently, there are around 6.9 trillion LUNA tokens in the circulating supply. The number increased after more LUNA tokens were minted to help save the UST peg earlier this month. However, the move was futile, but the increased supply lowered the price of LUNA to $0.

Burning tokens in the crypto space involves a similar process as a company buying back shares from its investors. As the price of the asset increases from the lowered supply, the investors are given back value.

Shiba Inu is still on a downtrend

Despite the increased burning, SHIB is still experiencing a weak price movement. The second-largest memecoin recorded a massive decline in May. The token dipped by more than 60% during the first week of the month.

The crypto market is currently showing bearish signals. The price movement shows that SHIB could retest lower levels of $0.000010. This is a critical support level for SHIB because pushing to a low of $0.000009 could trigger liquidations from traders expecting a further dip in prices.

On the other hand, the market has shown signs of consolidation during the past few days, in which SHIB could continue trading at the current levels until a strong factor influencing prices comes into play.

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