Unfortunately, massive burn does not help SHIB’s price
The amount of coins burned on the Shiba Inu network has exceeded MATIC’s total market capitalization, with over $4 billion worth of tokens burned since the mechanism was implemented, according to Shibburn tracker.
As the burn tracker suggests, over 410 trillion tokens were successfully burned by the network with the help of various businesses and entities using the token. Developers designed the SHIB burning mechanism to create constant support for the price of the token that should rise with the decreasing supply.
Since the burning mechanism was implemented months ago, the total burnt part value is expected to be even higher, making the Shiba Inu burnt supply superior to parts such as Matic, UNI and even Litecoin.
But realistically, the real value of the burned coins is significantly lower than $4 billion considering the lack of liquidity that can absorb such a massive volume of SHIB. Hypothetically, the injection of 410 trillion Shiba Inu tokens on the market would most likely push the price of the token to almost zero, pushing its market capitalization to absolute lows.
Why doesn’t the burning mechanism help SHIB?
The main reason for the inefficiency of the Shiba Inu burn mechanism has to do with the excessive volume of funds held by small investors who often enough provide enough selling pressure to overlook all the growth that SHIB derives from the constant burn events.
Thankfully, the last week was quite a success for the memetoken as it gained over 25% to its value in a matter of days. Unfortunately, SHIB traders and investors were unable to push the price of the token above the 50-day moving average.
