The Challenge of Shiba Inu's Supply: Why Hitting $0.0001 Is Unlikely

Summary:
Analysts have speculated that Shiba Inu (SHIB) could reach a price of $0.0001, reminiscent of its performance in 2020-2021. However, significant hurdles arise due to its massive supply and declining ecosystem demand, making this target challenging to achieve.

Key Takeaways

Shiba Inu is trading at $0.00001020 with a current market cap of $6.01 billion.
To reach $0.0001, SHIB’s price would need to increase by 880.39%, implying a market cap of $58.92 billion.
The supply of SHIB tokens remains high since not enough tokens have been burned recently to create a meaningful reduction.
The Shibarium layer-2 blockchain, intended to support burns, has not gained much traction, resulting in low transaction volumes and decreased demand.

Understanding Shiba Inu's Current Position

Market analyst Bunchhieng has suggested in a TradingView analysis that Shiba Inu could potentially replicate its gains from 2020-2021 and reach the target of $0.0001. Analyst Eunice Wong also anticipates this milestone may be achieved during the second phase of the ongoing bull market, particularly after SHIB's surge to $0.000045 in March 2024. Community expert Oscar Ramos is optimistic, asserting that SHIB reaching $0.0001 is "100% happening."

Market Capitalization: A Major Roadblock

Currently, Shiba Inu is trading at $0.00001020, with a market cap of $6.01 billion. This low price can be attributed to its enormous supply in comparison to cryptocurrencies with a smaller number of circulating tokens.

To hit the $0.0001 mark, SHIB’s price would need to rise by 880.39% from its current value. Keeping the supply constant at 589 trillion tokens, this would necessitate a market cap of $58.92 billion, representing an 880% increase in market cap to reach $0.0001 without changing the supply.

Since Ethereum co-founder Vitalik Buterin burned 410 trillion SHIB tokens in 2021, the community has struggled to eliminate even 1 trillion more from circulation. While daily token burns continue, they have not been significant enough to meaningfully decrease the overall supply and subsequently increase the price.

Demand in the Ecosystem Lags Behind Expectations

The Shibarium layer-2 blockchain was created to assist in the burning of tokens by incinerating a portion of transaction fees. However, its adoption has been minimal, with daily transaction volumes dropping dramatically from over 4 million at the beginning of the year to below 20,000 currently.

A supply as vast as Shiba Inu's necessitates a correspondingly high demand to drive significant price changes. Although the development team has launched projects like Shibarium and ShibaSwap to stimulate demand, interest in Shiba Inu's ecosystem has waned, leading to decreased activity within the broader crypto market.

While SHIB's price could see slight increases if demand rises without reducing supply, the likelihood of exponential burns remains slim. Achieving this would need investors to actively choose to eliminate portions of their holdings, a scenario that is currently improbable.