Despite its recent struggles, several factors could potentially spark a new rally for Shiba Inu (SHIB). As the second-largest meme coin by market capitalization, SHIB has seen its price drop by 9% over the past week, according to Coingecko. However, there are promising signs that suggest a comeback may be imminent.
1. The Burn Rate
In 2022, the Shiba Inu team introduced a burning mechanism aimed at reducing the coin’s massive circulating supply. This involves sending SHIB tokens to a null address with each transaction, thereby creating scarcity. This mechanism could potentially drive up the value of the remaining tokens, provided that demand remains stable or increases.
Recently, the burn rate has surged dramatically. In the past 24 hours alone, around 60 million tokens were burned, marking a 500% increase from July 22. To date, over 41% of the initial supply has been burned, leaving approximately 583 trillion SHIB tokens in circulation.
2. Moving Away from Exchanges
Another noteworthy trend is the significant net outflow of SHIB from exchanges over the past 30 days. This shift from centralized platforms to self-custody methods is generally seen as bullish, as it reduces immediate selling pressure. A similar pattern was observed in early March, which preceded a substantial bull run for Shiba Inu, with its valuation skyrocketing by triple digits in just a few weeks.
3. Rising Open Interest
Shiba Inu’s open interest, which represents the total number of outstanding derivative contracts, exceeded $30 million last week, reaching a one-month high. An increase in open interest typically signals greater market participation, with more traders entering the fray. This often precedes heightened volatility and significant price movements. While this metric doesn’t guarantee positive outcomes, it suggests the potential for substantial market activity, which could favor SHIB bulls if the broader market trends upward.
4. Progress of Shibarium
Lastly, it’s essential to consider the advancements of Shibarium, the layer-2 scaling solution for Shiba Inu. Launched about a year ago, Shibarium has achieved several milestones, including processing over 400 million transactions and producing more than 5.5 million blocks. Shibarium aims to enhance the Shiba Inu ecosystem by lowering transaction costs, improving speed, and increasing scalability. Many industry observers believe that continued progress in Shibarium could positively impact SHIB’s price.
