The Shiba Inu (SHIB) community has recently faced a concerning development, as the token burn rate plunged by a striking 70% within the past week. This unexpected drop has left investors puzzled regarding its cause and whether it correlates to the recent spike in Ethereum gas fees.
The decline in SHIB token burns has been especially noticeable in the last seven days, with a documented 69.57% decrease. Simultaneously, SHIB’s price has remained fairly steady, experiencing a 24-hour increase of 3.34%. The rise of meme coins in the crypto market has coincided with an unparalleled increase in Ethereum gas fees, hitting a 12-month peak of 87 gwei prior to settling at an average of 80 gwei, impacting SHIB – an ERC20 token – and raising questions about its burn rate.
Gas fees play a crucial role in the Ethereum network, as they cover the costs of transactions and smart contract executions. As the network becomes more congested, gas fees correspondingly rise, driving up the expense of network usage. This subsequently affects SHIB token burns, which have experienced a decline in response to these increased costs.
The surge in fees has led to SHIB token holders becoming more hesitant to burn their tokens, likely due to the elevated costs associated with the process. If these fees drop, it’s possible that SHIB token burns may regain momentum. However, the current situation highlights the significant impact the rising costs of using the Ethereum network can have on the cryptocurrency market and, specifically, on ERC20 tokens like SHIB.
On one hand, the recent drop in SHIB token burns may be of concern to the community, as it indicates decreased usage and potential stagnation. Conversely, the token’s stable price despite the burn rate decrease implies that it may still maintain market resilience.
In conclusion, while the 70% drop in the SHIB token burn rate raises questions related to the impact of Ethereum gas fees, it also sheds light on the token’s ability to sustain its value despite changing market conditions. However, further market research is vital for any potential investors to mitigate the risk of personal financial loss.
Source: Coingape
