Shibarium, the Ethereum-based layer-2 scaling solution for the Shiba Inu ecosystem, has suffered decreased activity in the past couple of days. Daily transactions being processed on the protocol plummeted from 4.77 million on Feb. 14 to just 54,640 on Feb. 17.
Shibarium: Sharp drop impacts SHIB’s price and burn rate
Data from Shibariumscan shows that this sharp decline has affected Shiba Inu’s (SHIB) performance. The massive reduction in user engagement triggered the crash in daily transaction volume.
The drop in transaction volume significantly impacted SHIB’s price as the meme coin’s value nosedived from $0.00001695 to its current price of $0.00001515. The gradual decline further discouraged market participants who sought alternative layer-2 platforms.
Notably, Shibarium is specially designed to encourage the growth of the SHIB network, and any reduction in activities on the protocol impacts the token’s price. It could also affect other ecosystem metrics, such as the deflationary mechanism of Shiba Inu.
Data from Shibburn shows that the burn rate has experienced a similar decline. SHIB’s burn rate dropped by 93.64,% with only 1,026,163 SHIB incinerated in the last 24 hours. This also implies that with the circulating supply not falling, the price of SHIB could not register a significant uptick in value.
As of this writing, SHIB is changing hands at $0.00001538, a 0.92% increase in the past 24 hours. Despite the marketwide induced jump, investors remain cautious, as trading volume has dipped by 18.75% to $207.72 million.
Will SHIB regain momentum?
Experts say the meme coin has largely appreciated based on community sentiment and ecosystem activities. They maintain that the current reduction in Shibarium daily transaction figures might dampen the enthusiasm of SHIB holders.
If this occurs, it could lead to selling pressure for the token and further complicate things for the dog-themed meme coin. However, some analysts believe Shiba Inu has reached a reset point that could mark a shift in price reversal.
Market participants would likely monitor the Shibarium transaction count to see if it would reboot and set new daily transaction records. This is necessary to support a price rally for SHIB.
