How Shiba Inu Burns Do Not Affect Token Prices; Shibburn Explains

Shiba Inu

Shibburn, a Shiba Inu burn tracking tool that manages transactions, recently brought up a key issue concerning the effect of token burns on the price movement of Shiba Inu in a tweet. To clarify misunderstandings about burns and price, Shibburn responded to a frequently asked question it receives, which is: “Why doesn’t the price change even after large-scale burns?”

Shibburn clarified that token burns alone do not have a significant impact on prices unless there are consistent and substantial token investments. Even if 10 billion tokens are burned every week, the price won’t be notably affected if much larger token transfers occur frequently and the prices remain stable.

Supply and Demand’s Impact On Prices

Shibburn emphasized that the price of a token isn’t determined solely by token burns. It explained that even when a substantial proportion of a token’s supply is burned, the token’s value fundamentally depends on supply and demand dynamics.

Shibburn observed, “A token can burn up to 90% of its supply, but without demand for it, it essentially carries no value.”

Related article: Shiba Inu: Shibarium Unveils YouTube Channel Featuring Three Video Releases

Top 100 Shiba Inu Accounts Hold 400T SHIB

Shibburn highlighted the distribution of Shiba Inu tokens, pointing out that the top 100 accounts, mainly centralized exchanges, hold around 400 trillion tokens, excluding the burn address.

Despite this distribution, Shibburn reassured that the token’s price can still rise significantly based on demand, especially during a bullish market. As more people continue to buy, exchanges increase their purchases, leading to a rise in Shiba Inu’s price.

The tweet also debunked the misconception that a token’s success is solely defined by reaching a specific price target, like $0.01. Shibburn emphasized that different investors have their own price goals, and some might have already sold their holdings when the token reached their target price. Success depends on various factors beyond a single price target.

It further emphasized that priority should be given to embracing and constructing projects, and engaging actively in initiatives that contribute to the growth of the token.

Related also: New Milestone for Shibarium as Testnet Crosses 31M+ Transaction

How Burning Affects a Token

Shibburn expressed disagreement with those who underestimate the significance of token burns, highlighting that they have meaningful implications. To illustrate the concept of token burning, Shibburn used an analogy, comparing it to a scenario where a whale acquires an enormous quantity of tokens but never sells them.

“Imagine token burning as if a whale were attempting to acquire a massive portion of the token’s supply, but these tokens would be permanently locked away, never to be sold. Clearly, such an action would have a substantial impact,” Shibburn clarified.

Interestingly, according to a report, some enthusiasts of Shiba Inu anticipate that, once Shibarium is operational, around five trillion SHIB tokens could be burned on a monthly basis.

Disclaimer: The information in this article should not be considered financial advice, and FXCryptoNews articles are intended only to provide educational and general information. Please consult with a financial advisor before making any investment decisions.

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