Shiba Inu (SHIB) has surged by 4% in the last 24 hours, currently trading at around $0.00001786. This increase is part of a larger trend, as SHIB’s valuation has risen nearly 40% over the past month. Several key factors drive this positive momentum, including declining exchange reserves and increased token burns.

Declining Exchange Reserves Signal Positive Change

According to CryptoQuant, SHIB’s exchange reserves have steadily decreased over the past year. This decline indicates a shift towards self-custody methods among investors. As more holders choose to keep their tokens off exchanges, the immediate selling pressure decreases. Consequently, this trend can be interpreted as a bullish signal for SHIB’s price.

Increased Token Burns Enhance Scarcity

In addition to declining reserves, SHIB has experienced a remarkable increase in its burn rate. Over the last 24 hours, the burn rate has surged by more than 400%. Almost 3 million tokens have been sent to a null address during this period. Although the USD value of these burned tokens may seem insignificant, ongoing burns contribute to SHIB’s scarcity. If demand remains steady or increases, this scarcity could enhance SHIB’s value.

Growing Interest Reflected in Large Transactions

Moreover, large transactions involving SHIB are on the rise. The metric for large transactions, which tracks transactions over $100,000, has increased by 5.5% daily. This uptick suggests that investor interest is growing, often correlating with bullish market trends.

Challenges with Shibarium’s Performance

Despite these positive developments, Shiba Inu’s layer-2 blockchain solution, Shibarium, faces challenges. Since early October, daily transactions on Shibarium have remained below 10,000. This figure contrasts sharply with millions of transactions earlier in 2024. Such underperformance raises concerns about Shibarium’s ability to support SHIB’s growth effectively.

In summary, Shiba Inu’s recent price increase reflects favorable market dynamics driven by reduced supply and heightened investor interest. However, the ongoing struggles of Shibarium could pose risks to sustained growth. Investors will closely monitor these developments as they evaluate SHIB’s potential in the coming weeks and months.

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