Shiba Inu has surged by 20 percent this month following the introduction of the token burn mechanism.
According to reports, 2,240 new addresses were reportedly registered for Shiba Inu on December 6.

Shiba Inu (SHIB) has recently breached a critical resistance level to hit $0.00001 after recording a 20% surge in December alone. As of press time, the meme coin had a bearish market sentiment with a score of 35/100. In the past 24 hours, the asset has declined by 4.15% but has made a 34.49% gain in the last 90 days, adding $0.000002 to its previous price.

According to analysts, more price gains lie ahead for the meme coin as key on-chain activity and technical indicators indicate bullish signs. 

A renowned on-chain data analytics IntoTheBlock has disclosed that SHIB New Addresses hit a historic peak this week. This comes following reports that the Shibarium L2 network is about to start burning 70 percent of base fees generated from processed transactions. 

The token-burning mechanism captured in the official blog post is meant to strategically reduce the token supply. It was reported that two phases would be witnessed in the process, and these are the manual phase and the automatic transition. The manual phase would manage the initial burning process and would be manually managed by the official deployer wallet. This would improve the network’s health and sustainability by ensuring close monitoring and adjustments. With the automatic transition, it would start in January and would ensure that the mechanism evolves into an automatic system. 

Token Burn to Trigger Price Surge for Shiba Inu 

The success of the burning mechanism has been fixed on the adoption rate of the network.

A pivotal aspect of the burn mechanism’s success is the network’s adoption rate. As Shibarium experiences an increase in the number of transactions and a significant rise in gas fees – by as much as 1000% – the token burning also grows exponentially. This correlation is key: the more the network is adopted and used, the more tokens will be burned, creating a self-sustaining cycle of growth and value appreciation.

Based on history, token burn usually triggers an upward surge in price. The announcement by the team appears to have attracted new investors as 2,240 new addresses were reportedly registered for Shiba Inu on December 6. According to analysts, Shiba Inu does not often get this many wallets created on the same day. The last time that happened was on August 16. 

Network growth as a metric cannot be ignored when measuring how a blockchain ecosystem is attracting new investors. Positive growth under this metric is mainly associated with bullish signals as users appear to carry out economic transactions which also triggers token burns. 

The growing bullish momentum is also supported by the Bollinger Bands indicator which shows that the process broke into the upper band at $0.000099. Bulls are, however, expected to breach the $0.000011 to set a new yearly high. Investors who bought at the price have reportedly been holding onto their positions for the past four months now. Analysts believe that bulls could rely on the lower Bollinger Band at $0.0000086 for support in case of a pullback. 

 

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Filed under: Bitcoin - @ December 11, 2023 5:23 pm