Shiba Inu Burn Rate Explodes 856%, But Why Is SHIB Still Dropping?

Shiba Inu (SHIB) saw its burn rate soar by over 800%, as nearly 6 million tokens were permanently removed from circulation. 

This development sparked slight investor optimism, even as SHIB prices dropped in line with a broader cryptocurrency market downturn.

Shiba Inu Burn Rate Increases by 856%

Data from Shibburn revealed an 856% spike in the Shiba Inu burn rate within 24 hours, with approximately 6.27 million SHIB tokens removed from circulation. The burn mechanism is designed to decrease the circulating supply by sending tokens to an inaccessible wallet, which some investors associate with potential price increases based on supply and demand dynamics.

Despite the surge in the burn rate, SHIB’s price dropped 11% intraday, trading at $0.00001774 at press time. 

Over the last 24 hours, SHIB experienced a trading range between $0.00001755 and $0.00002001, reflecting continued volatility in the meme coin’s price action.

Market Slump Ahead of FOMC Impacts SHIB and Other Cryptos

The broader cryptocurrency market remains under pressure as investors exercise caution ahead of the January 29 Federal Open Market Committee (FOMC) meeting. This bearish trend has extended to meme coins like Shiba Inu, with market participants reflecting a risk-averse sentiment amid rising volatility.

The crypto market has also seen increased liquidations, adding to the price pressure on digital assets. Analysts believe that SHIB’s ability to recover in the short term may hinge on the market’s response to the outcomes of the FOMC meeting.

Key Support Zone and Whale Accumulation Trends

According to crypto analyst Ali Martinez, the $0.0000185 to $0.0000212 range represents a critical support zone for Shiba Inu. SHIB’s current price remains below this range, raising concerns among investors. 

However, recent whale activity suggests growing interest in the asset at current levels.

On-chain data from IntoTheBlock shows a 724% increase in large holder net flows for SHIB over the past week. Positive net flows jumped from -400 billion SHIB on January 21 to 665 billion SHIB on January 22, signaling a potential accumulation phase among whales. 

Large holders may view SHIB as undervalued and anticipate future price movement as consolidation continues.

Shiba Inu Ecosystem Continues to Develop

Shiba Inu’s marketing lead, LUCIE, assured the community on X that “The Shib Ecosystem is still building strong” despite the market downturn. 

This statement has added to optimism about upcoming advancements within the ecosystem.

Meanwhile, top SHIB holders reportedly accumulated close to 30 trillion tokens, demonstrating confidence in the project’s future potential. Investors are closely watching SHIB’s price action and ecosystem developments as the broader market adjusts to macroeconomic factors.

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