2 good reasons to sell Shiba Inu

With market capitalization $12 billion, shiba inus (CRYPTO: SHIBA) is the 15th largest crypto by market cap. But despite its size, the iconic meme coin has fallen 75% from its all-time high reached in late October. Let’s explore three reasons why the decline may be far from over.

1. Burning Coins Cannot Replace Growth

According to crypto news site Watcher News, Shiba Inu developers plan to help users “burn” SHIB tokens by adding a burn portal to the platform’s decentralized exchange, ShibaSwap. Burning involves sending tokens to an inaccessible address to remove them from circulation, which could help drive up prices by restricting supply.

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Although the developers did not provide details, this could be done by waiving a percentage of transaction fees when users trade SHIB on ShibaSwap. And if it goes into effect, it would follow a series of “burn parties” organized by Shiba Inu shareholders – including a Valentine’s Day event that destroyed 240 million SHIB tokens worth around 7,500 dollars.

But with a whopping 549 trillion SHIB tokens in circulation, burning a relative handful of coins is unlikely to do much to reduce the overinflated supply of the asset. Moreover, combustion only deals with the supply side of the equation. If demand continues to decline at a rate potentially greater than users can destroy the tokens, SHIB’s price crash will continue.

2. The Metaverse Project Won’t Fix The Problem

The Shiba Inu developers have another trick up their sleeve as they attempt to reinflate the SHIB bubble: a metaverse. The project, dubbed Shiberse, was announced in January as “an immersive experience” for the Shiba Inu ecosystem. And in February, the team provided an update featuring Shiba Lands, which will be virtual real estate in the proposed metaverse. But the devil is in the details.

According to the announcement, Shiba Lands will need to be purchased with killer doge, a completely different token from SHIB. This means that the metaverse may have no fundamental impact on SHIB demand (apart from generating hype) unless developers integrate SHIB into some undisclosed aspect of the project.

The announcement also suggests that there will be an anti-dumping mechanism that could prevent investors from selling the token after buying it. This feature has been used in cipher thefts such as the squid game the token scam, which was used to steal more than $2.1 million in 2021. Such a feature could damage the credibility of the project if developers put investors at risk of not being able to sell when they wanted.

Can Shiba Inu get rid of the meme room stigma?

Unlike earlier meme coins (these are cryptocurrencies designed to benefit from hype, not utility) such as Dogecoin, the developers of Shiba Inu have made a valiant attempt to create use cases for SHIB. But unfortunately, these efforts have done little to stop the asset’s steady decline. Ultimately, Shiba Inu doesn’t bring much new to the table in terms of technical specifications, and its fundamentals are still weak.

With hundreds of trillions of SHIBs in circulation, coin burning will have a miniscule impact on token supply. And so far, the developer’s highly publicized metaverse project doesn’t seem to have much bearing on the token’s fundamentals either. Investors should avoid Shiba Inu until these challenges are resolved (if still possible).

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Will Ebiefung has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

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