Shiba Inu Price Forecast: SHIB Risks Over 10% Drawdown as Burn Rate Declines

Shiba Inu (SHIB) faces a potential drawdown of more than 10% from current levels, as on-chain data shows a sharp decline in the token’s burn rate. The burn rate, which tracks the number of SHIB tokens permanently removed from circulation, has fallen significantly over the past week, reducing a key supply-side support that had previously buoyed prices.

Burn Rate Decline and Its Impact on SHIB

The Shiba Inu burn rate, which measures the daily volume of SHIB sent to dead wallets, has dropped by over 60% in the last seven days, according to data from Shibburn. This reduction in token destruction weakens the deflationary narrative that has been a core part of SHIB’s value proposition. A lower burn rate means more tokens remain in circulation, increasing supply pressure and potentially driving prices lower.

Historically, spikes in the burn rate have coincided with short-term price rallies, as reduced supply often attracts speculative buying. Conversely, sustained declines in burn activity have preceded periods of price consolidation or correction. The current trend suggests that the market’s enthusiasm for SHIB’s burn mechanism is waning, which could open the door for bearish moves.

Technical Analysis: Key Support Levels to Watch

From a technical perspective, SHIB is trading near a critical support zone. As of this week, the token is hovering around $0.000010, with immediate support at $0.00000950. If this level fails, the next major support lies at $0.00000880, which corresponds to a drawdown of approximately 12% from current prices.

The Relative Strength Index (RSI) on the daily chart is currently at 42, indicating bearish momentum but not yet oversold. The Moving Average Convergence Divergence (MACD) line has crossed below the signal line, a bearish signal that often precedes further downside. Volume has been declining, suggesting that buyers are losing interest, which could accelerate the move lower.

What This Means for SHIB Holders

For investors, the combination of a falling burn rate and weak technical indicators points to a challenging short-term outlook. While SHIB has shown resilience in the past, the current setup suggests that a break below the $0.00000950 support could trigger a cascade of sell orders, amplifying the drawdown.

However, it’s important to note that cryptocurrency markets are highly volatile, and external factors such as broader market sentiment or regulatory news can quickly alter the trajectory. Traders should monitor the burn rate data and key support levels closely over the coming days.

Conclusion

Shiba Inu faces a heightened risk of a 10% or greater drawdown as its burn rate declines and technical indicators turn bearish. The loss of deflationary momentum, combined with weakening price action, suggests that SHIB may struggle to hold current levels. While the token has defied expectations before, the current confluence of on-chain and technical signals warrants caution for traders and long-term holders alike.

FAQs

Q1: What is the Shiba Inu burn rate?
The burn rate refers to the number of SHIB tokens permanently removed from circulation by sending them to an unusable wallet. A higher burn rate reduces supply, which can support price, while a lower rate may increase supply pressure.

Q2: How much could SHIB drop?
Based on technical analysis, SHIB could fall to the next support at $0.00000880, which would represent a drawdown of roughly 12% from current levels, assuming the $0.00000950 support fails.

Q3: Should I sell my SHIB?
This article is for informational purposes and does not constitute financial advice. Given the current bearish signals, it is advisable to conduct your own research or consult a financial advisor before making any investment decisions.