Shiba Inu (SHIB) has captured the attention of retail investors. However, its price has fallen significantly since its all-time high (ATH) of $0.00008845 in October 2021. Currently trading at around $0.00001388, SHIB sits over 84.3% below its peak.
Understanding SHIB’s Price Drivers
The Shiba Inu (SHIB) price is influenced by many factors. The broader cryptocurrency market, particularly the trends of Bitcoin (BTC), significantly impacts SHIB’s value. When Bitcoin experiences price swings, SHIB often follows suit.
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Beyond market forces, unique aspects of SHIB’s tokenomics also influence its price. One key factor is token burns, which permanently remove SHIB tokens from circulation. In theory, reducing supply with consistent demand can drive the price up.
The most significant burn event in SHIB’s history occurred in May 2021, when Ethereum co-founder Vitalik Buterin sent a massive 410 trillion SHIB tokens (over 41% of the total supply at the time) to a burn wallet. This burn coincided with an existing uptrend for SHIB, and some argue that it significantly bolstered the momentum, leading to the ATH in October 2021.
The Potential Impact of Another Large Burn
The Shiba Inu community has continued burning tokens but at a slower pace compared to Buterin’s contribution. What if another large-scale burn, similar to Buterin’s, were to occur?
Shiba Inu (SHIB) has a circulating supply of approximately 589 trillion tokens and a market capitalization of $ 8.2 billion. If another 410 trillion SHIB were burned, the circulating supply would decrease dramatically to around 179 trillion. This substantial supply reduction would likely affect SHIB’s price, but the exact outcome depends on the market cap’s response.Potential Price Scenarios with a Burn
There are two main scenarios to consider:
Firstly, If the market cap increases proportionally to the decrease in circulating supply, the new price would be calculated by dividing the old supply (589 trillion) by the new supply (179 trillion ) which would be equal to the ratio of 3.29.
Then, multiply the current market cap ($8.2 billion) by 3.29. The new market cap will be $27 billion. This will result in a new price per SHIB token of $0.000151, a 987% increase from the current price.
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Secondly, the market cap remains at $8.2 billion despite the burn. With a reduced supply of 179 trillion, this will reflect a price increase, but it wouldn’t surpass the ATH.SHIB burns can impact price, but the overall impact depends on market cap response. A proportional market cap increase could push SHIB to new heights, while a stagnant market cap would lead to a smaller price increase. It’s important to remember that the cryptocurrency market is inherently volatile and unpredictable.
Disclaimer: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Times Tabloid is not responsible for any financial losses.
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