Why Did Shiba Inu See One of the Worst Crashes This Week?

Key Insights:

• Shiba Inu has fallen more than the market average, which sank it to the 19th spot by market cap.
• The price now lies at $0.000011, and any fall below $0.00001 could trigger another 20% crash till $0.000008.
• Despite positive regulatory action on memecoins, Shiba Inu lacks the momentum to recover.
• Shibarium's daily transaction has also fallen from 4.5 million per day to less than 100k per day at press time.

Shiba Inu has dropped to one of the lowest levels in the last six months, dipping even lower than its bull-market base support level at $0.000015. There were several reasons that led to this drop, such as Bitcoin Reserve news, market liquidity, memecoin-selloff and concerns regarding altcoin ETFs.

• Donald Trump announced there would be no additional crypto purchases and the stockpile would only safeguard those existing with the US Government.
• Last December, the US Fed announced that there is very little possibility that a rate cut will hit the markets in 2025 due to high inflation.
• Further, a lot of memecoin launches triggered a market-wide dislike for memecoins.
• Crypto whales began offloading memecoins after ETF data revealed that most Bitcoin ETF holders were indeed speculators and not long-term investors. This triggered a fear that altcoin ETFs too would meet the same fate as Ethereum.

Weakening Fundamentals

Shiba Inu fundamentals have also started to become worse. In the first week of February, the Shibarium blockchain saw roughly 4.5 million transactions per day, which fell down to 100k per day or even less sometimes.

Shiba Inu relied on Shibarium for a large part of the tokens that it burnt. Given the sharp drop in Shibarium transactions, there is a consequent sharp drop in burn rates.

Shiba Inu relies on high burn rates to control its 589 trillion token supply. Over the years, it had burned several billion tokens, but realistically, the burnt tokens are just a fraction. Going forward, Shiba Inu might need to increase the burn rate drastically to keep its token price floating.

BONE, the governance token of Shiba Inu has also witnessed a sharp fall in its market cap, falling to $47 million at press time. Last month around mid-February, Bone had a market cap of $72 million.

Why Did Memecoin De-Regulation Have No Impact?

The SEC de-regulated memecoins last week through a press statement that noted memecoins lacked any real world utility and hence are not securities, which implied they were out of the SEC's jurisdiction.

De-regulation should have brought a larger rally in the memecoin markets as these cryptocurrencies are now out of the ambit of any stringent regulations and could be traded much like baseball cards.

SHIB Price Analysis

Shiba Inu's fall below $0.000012 this week was one of the worst falls because it has potentially triggered a bearish phase for SHIB. The fall was a part of the wider downtrend in Shiba Inu prices which has been in place since 08 December 2024.

Technical charts too signal that the bearishness in Shiba Inu could continue in the near future. RSI has touched the levels of 30 and is on a downtrend. MACD too has shown a negative divergence on 1D charts.

If Shiba Inu makes a quick recovery above $0.000012, it may not enter into a long-term bearish phase, otherwise prices could drop 20% further below to $0.0000088 zone.

Will Shiba Inu Recover?

It seems that recovery could be a major challenge for Shiba Inu given the current market churning and the general dislike for memecoins during bearish phases.

However, if the crypto working group decisions turn out to be in favor of the memecoin markets, Shiba Inu could show a solid comeback around mid-2025.

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.