Shiba Inu ($SHIB) has seen a dip in prices recently, with holders and speculators increasingly worried. But even as the dip was taking place, two of the most critical metrics, namely the rise in the burn rate of the SHIB tokens and the rise in total value locked (TVL) on the Shibarium network, suggest the potential for a rebound in prices. Is this a dip before the next potential upturn?
What is Shiba Inu and why should we care?
Shiba Inu is a memecoin launched in 2020 as a substitute for Dogecoin on the Ethereum platform. Initially thought of as a joke, SHIB picked up steam because of a strong online community, meme-driven virality, and ongoing development. The ecosystem currently has its own decentralized exchange (ShibaSwap), a second-layer blockchain Shibarium, and other tokens like BONE and LEASH.
Compared with other fixed-use cryptocurrencies, SHIB has evolved into a larger ecosystem with staking, governance, and DeFi integrations. It has been one of the most discussed altcoins, consistently being among the top 20 by market capitalization and being coveted by speculative investors and long-term holders
Price Decline Meets Chain Expansion
SHIB dropped by around 20% from last week, from $0.000016 down to around $0.00001270. The drop coincided with the weakness of the general market. The Dow Jones and the S&P 500 fell over 2% on the 28th of March, and crypto was no exception. Bitcoin dropped from around $89,000 down below $82,000, dragging the entire market cap down with it to $2.7 trillion.
Below the surface, the SHIB ecosystem is showing resilience, though. Shibburn indicates that on March 24, more than 1 billion SHIB were burned in 24 hours, a staggering 8,089% rise. In total, more than 410 trillion SHIB have been burned since the project's inception. The goal? To lower supply for long-term appreciation.
Meanwhile, Shibarium, the project's Layer 2 blockchain, saw its TVL rise 24% for the last 30 days, up to $2.5 million. ShibaSwap, the ecosystem's core DeFi platform, increased 37%, with WoofSwap and ChewySwap up 31% and 20%, respectively. These numbers reflect growing user activity and growing trust in the network despite the price dip.
Analysts track key levels and indicators
SHIB is technically still in a falling wedge, which is a bullish breakout indicator. The coin is just above the key level of support of $0.00001235, a level tested previously in mid-2023 and early 2024. If the coin can hold this level of support and break the resistance of $0.00001350, it could retest $0.00001500 or better.
The RSI (Relative Strength Index) is 48.14, which is neutral, but a break higher than 50 would be bullish confirmation of momentum. The MACD (Moving Average Convergence Divergence) is also showing early signals of a crossover, which is typically a bullish sign of increasing prices. In the opinion of the analyst SHIB KNIGHT, SHIB "looks good" as the market recovers.
The volume also remains active with over 438 billion SHIB traded in the last 24 hours. When the volume goes up with the price staying the same or going up, it can be a short-term reversal confirmation.
What Might Come Next
While the TVL growth and burn rate remain positive, crypto markets remain volatile. If the break of resistance is achieved by SHIB and the growing volume of trades continues, a surge toward $0.00001500, even $0.00001600, is possible, up by over 15%. But if the current support of $0.00001235 is lost, then further losses down toward $0.00001200, even lower, could be observed.
Disclaimer: The below is not investment advice. Any investment carries some level of risk. Do your own research.
Final Thoughts
Shiba Inu's recent fall has unnerved some investors, but growing on-chain activity tells a different story. The rise in burn rates and the building of the Shibarium network will not necessarily result in a reversal of prices, but it does suggest the project is still gaining traction behind the scenes. With all things crypto, patience and vigilance will be the watchwords.
