Outside Source
The second-largest meme coin in terms of market capitalization—Shiba Inu (SHIB)—has been underperforming lately, with its price slipping by 9% on a weekly basis (Coingecko’s data).
In the following lines, though, we will outline some important factors and indicators that suggest that a fresh resurgence could be in the cards.
The Burn Rate
The Shiba Inu team implemented the burning mechanism in 2022, aiming to reduce the tremendous circulating supply of the meme coin. The process involves sending SHIB to a null address with each transaction. This promotes scarcity and could, in theory, drive the value of the remaining tokens up (assuming demand stays the same or increases).
Over the past several days, the burn rate has been exploding. Data shows that around 60 million tokens have been destroyed in the past 24 hours, a 500% increase compared to the figure observed on July 22.
More than 41% of the initial supply has already been burned, leaving approximately 583 trillion SHIB tokens in circulation (as of the moment of writing these lines).
Abandoning Exchanges
Another element worth mentioning is the SHIB exchange netflow. Outflows have significantly surpassed inflows in the past 30 days, signaling a shift from centralized platforms toward self-custody methods. This is generally considered bullish for the price since it alleviates the immediate selling pressure.
Recall that a similar trend was observed at the start of March when Shiba Inu’s valuation experienced a real bull run, spiking by triple digits in mere weeks.
Open Interest
Shiba Inu’s open interest (the total number of outstanding derivative contracts, such as futures or options, that have not been settled) exceeded $30 million last week, tapping a one-month high.
A rise in open interest typically signals increased participation in the market, meaning more traders are jumping on the bandwagon. It is often a precursor of enhanced volatility and a violent price move in any direction.
While this metric doesn’t necessarily spell good news, it usually is a precursor to a substantial move. If the broader market remains in a rally, it could play into the hands of SHIB bulls.
Shibarium’s Progress
Last, but not least, it’s important to take a look at the advancement of the layer-2 scaling solution Shibarium. It was launched approximately a year ago and has since passed numerous milestones.
For instance, the protocol has processed over 400 million transactions and produced more than 5.5 million blocks.
Shibarium’s main purpose is to foster the development of the Shiba Inu ecosystem by lowering transaction costs, improving speed, and enhancing scalability. Some industry participants believe its further progress could have a positive impact on the SHIB price.
For more updates on the matter, make sure to check out our Shibarium news.
This article first appeared at CryptoPotato
