Shiba Inu burn tracker clarifies misconceptions about token burns’ impact on Shiba Inu price, emphasizing demand and uniform investments as key price drivers.
In a recent tweet, Shibburn, a Shiba Inu burn tracker that automates transactions, raised a crucial point concerning token burns and their impact on Shiba Inu price movement. To clear up misconceptions surrounding burns and price, Shibburn addressed a common question it often encounters:
“Why isn’t the price moving after ‘massive’ burns?”
“It’s burning, but price not moving!”
We wanted to address some misconceptions about burns and price. This applies to $SHIB and many other tokens as well.
A common question that comes our way is “Why isn’t the price moving after “massive” burns?” At this moment, burns are… pic.twitter.com/uMuJQubpNO
— Shibburn (@shibburn) July 23, 2023
According to Shibburn, the answer is that burns alone cannot influence prices without uniform and substantial token investments. It noted burning as much as 10 billion a week would not create a substantial price impact when much larger token transfers happen regularly and prices remain stable.
Supply and Demand Is What Drive Prices Up
Shibburn stressed that token burns do not solely determine the price of a token. According to them, even if a token burns a substantial portion of its supply, its value ultimately relies on the principle of supply and demand.
“A token can burn 90% of its supply, but if there’s no demand for that token, then it holds no value,” Shibburn remarked.
Top 100 Shiba Inu Accounts Hold 400T SHIB
Regarding the distribution of Shiba Inu tokens, Shibburn pointed out that the top 100 accounts, excluding the burn address, hold approximately 400 trillion of the token’s supply, and these accounts are primarily centralized exchanges.
However, Shibburn reassured that despite this distribution, the price can still rise based on demand, particularly during a bullish market when more people continue to buy, prompting exchanges to increase their purchases, thereby increasing Shiba Inu’s price.
The tweet also addressed the misconception that a token’s success is solely determined by reaching a specific price target, such as $0.01. The burn tracker expressed that different investors have their own price goals, and some might have already taken profits when the token reached their target price.
It added that the focus should be on adoption, building projects, and actively participating in initiatives contributing to the token’s growth.
Impact of Token Burn
Shibburn disagreed with those who dismissed the importance of token burns without understanding their implications. To clarify the essence of token burning, Shibburn used an analogy, comparing burning to a situation where a whale buys a massive amount of tokens but never sells them.
“Think of burning as if a whale were trying to buy a massive amount of the token’s supply, except this whale will never sell. Those tokens remain locked forever. So, how can that not have an impact?” Shibburn explained.
Notably, as The Crypto Basic reported, some Shiba Inu enthusiasts anticipate that at least five trillion SHIB tokens could be burned monthly after Shibarium goes live.