SHIB burning and its price- Is it a tale of ‘two roads diverged in a yellow wood’
The scarcity principle dictates that consumers place a higher value on products that are perceived to be scarce. In economics, when demand equals supply, an equilibrium is achieved. However, a disequilibrium ensues when demand exceeds supply or vice versa.
In the first instance, prices of such products are driven up due to an increase in demand. In the cryptocurrency market, this is desirable and achievable through a process known as “Coin Burning”
Put simply, Coin Burning occurs when developers and miners of a particular cryptocurrency remove a specified portion of the cryptocurrency from circulation. This is done with a view to restrict supply hence, make them scarce, thus driving up the price.
However, the reverse is the situation in the case of Shiba Inu. With its burning portal launched on 23 April data from the portal revealed that a total of 410,343,698,658,607 Shiba Inu tokens have been burnt so far.
In the last 24 hours, the burn rate spiked by over 5000% with a total of 12,713,172,460 SHIB tokens removed from circulation. One might expect a corresponding spike in price, however, in the last 24 hours, no significant traction was made by the SHIB token.
What do we mean, you might ask. Come with us.
Since burning commenced on the portal, the price of the SHIB token plummeted. In fact, since the inception of burning, the token suffered a 48% decline. With a 5119.23% spike recorded in burn rate in the last 24 hours, no corresponding pressure to drive up price was observed. With the token down by 2% in the last 24 hours, investors appeared unexcited by the massive burning activity.
Source: CoinMarketCap
A quick look at the market capitalization revealed a decline. At $13.2b 25 days ago when burning commenced, the token
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