Shiba Inu Price Surges as Burn Rate Soars, but Challenges Remain

Shiba Inu’s price has been on the rise for three consecutive days, reaching a high of $0.00001315 as cryptocurrencies rebounded and its burn rate soared. Despite this surge, SHIB continues to underperform most major tokens, remaining down nearly 60% from its November 2024 high.

Burn Rate Boost

One potential short-term catalyst for SHIB is its rising burn rate, which jumped by 1,823% on Friday. This upward trend is generally seen as bullish, as it reduces the circulating supply and introduces a deflationary pressure on price.

Ethereum’s Bull Run

Another potential catalyst is the strong bull run of Ethereum, which has broken above $4,000 for the first time since November last year. SHIB and most ERC tokens tend to perform well when Ethereum is in an uptrend.

Headwinds Ahead

Despite these positive developments, SHIB still faces significant headwinds that could weigh on its price. Shibarium, its layer-2 network, is underperforming, with total value locked dropping by 7.15% in the last 30 days to just $1.7 million, highlighting weak user adoption.

Additionally, there are signs of declining demand for SHIB, with daily trading volume falling below $200 million on multiple occasions, a relatively low figure compared to historical norms.

Technical Analysis

The three-day chart shows that SHIB has been stuck in a tight range for the past several weeks. It is now trading below both the 50-day and 100-day moving averages, a bearish signal.

More notably, Shiba Inu has formed a bearish pennant pattern, characterized by a vertical flagpole and a converging symmetrical triangle. The triangle is nearing its apex, which suggests a breakout may be imminent, and in this case, likely to the downside.

If a breakdown occurs, the next key support to watch is $0.00001022, SHIB’s lowest level this year. A drop below that could open the door to further downside pressure in the near term.