3 Factors Fueling Bearish Sentiment for Shiba Inu Coin (SHIB)

Shiba Inu coin, one of the most popular memecoins, has continued to experience a price downturn. The coin was trading for $0.00001517 at the time of writing.

Unfortunately, the situation worsens as multiple data points to a sustained negative growth ahead. Interestingly, this situation is shocking as past success has given the community what to hope for.

However, the memecoin is now struggling, with key metrics pointing to a decline in momentum. As the community seeks to know why, here are some reasons for the Shiba Inu coin selloff.

The Slump in Shibarium Transaction Count

One of the visible shifts for SHIB is the fall in transactions on Shibarium, its layer-2 blockchain network.

Per data, the memecoin’s daily transactions have dropped from over 4.5 million last week to under 90,970 as of February 18.

This massive reveals a big drop in user engagement.

For context, Shibarium was introduced to strengthen SHIB’s scalability and reduce transaction costs. However, its recent slowdown raises questions about what the future holds.

With 9,536,658 blocks processed and an average block time of 5.0 seconds, the network appears not to be making much difference. This has made Shiba Inu coin investors worried about the future.

It is worth mentioning that if network usage drops do not change, it may impact SHIB in the future. This is because low transaction volumes are a sign of reduced investor confidence.

Shiba Inu Coin Burn Rate Collapses as Bearish Sentiment Derails Community

The Shiba Inu burn mechanism, designed to reduce the token’s circulating supply and create scarcity, has also fallen.

For example, over the past 24 hours, just 16,122,637 SHIB tokens were taken out of circulation. This marks a 23.7% drop in the burn rate per data from Shibburn.

Meanwhile, a higher burn rate gave SHIB holders hope in the past. This is because a drop in supply brings scarcity which can also aid Shiba Inu coin growth.

However, the recent decline suggests that community-driven efforts to achieve this scarcity is slowing down.

There are now 584,297,402,904,694 SHIB still in circulation out of a total supply of 589,255,503,464,882 SHIB.

The Shiba Inu coin has a max total supply of 999,982,339,482,145 SHIB. This excludes 4,958,100,560,187 SHIB that are currently staked (xSHIB), further affecting liquid supply dynamics.

Broader FUD in the Memecoin Segment: LIBRA Effect

Another major factor contributing to Shiba Inu’s decline is the rise and fall of the LIBRA memecoin. While unconnected, the bad outlook of LIBRA is impacting more volatile memecoins

LIBRA surged after Argentina’s President, Javier Milei, promoted it in a now-deleted X post. His endorsement triggered a rally, pushing LIBRA’s market cap to $4.4 billion.

However, the token crashed by 95% just hours later, wiping out the $4 billion valuation.

A similar trend occurred with the TRUMP memecoin, which soared to a $75 billion market cap and fell. The market is suffering from the impact of the LIBRA downfall.

Many are questioning whether Shiba Inu is dead or still worth watching. While opinions vary, some investors believe the memecoin could come back when market sentiment shifts

However, the current situation remains uncertain, and investors can only monitor trends to see what will happen next.