Shiba Inu drops 5% despite biggest token burn in 6 months – Here’s why!

Token burns often act as a mechanism to help a token diverge from broader market FUD.

The logic is simple: Burning tokens permanently removes them from circulation by sending them to dead wallets, reducing the liquid supply available in the market.

If demand stays the same or increases, this lower supply can create scarcity, supporting price and helping the token outperform the broader market.

The Shiba Inu community appears to be testing this thesis in real time. As the chart below shows, more than 110 million SHIB were burned on the 8th of July, marking the biggest single-day burn in six months.

More importantly, weekly burns have now climbed to 152 million SHIB, suggesting the burn rate is accelerating despite broader memecoin weakness. 

However, the burns have yet to translate into any meaningful technical strength.  SHIB is down around 4.57% on the daily chart, continuing to diverge from the typical scarcity-driven narrative.

The reason becomes clearer when looking at Shiba Inu’s [SHIB] supply dynamics.

Since launch, the SHIB community has burned more than 410 trillion SHIB, yet roughly 585.6 trillion tokens still circulate in the market.

In other words, the recent increase in burn activity removes only a tiny fraction of the total supply, failing to materially tighten the circulating supply. Without a meaningful pickup in demand, reduced supply alone is unlikely to reverse SHIB’s broader downtrend.

From a market perspective, this shifts the focus back to the broader memecoin sector. If sector-wide liquidity continues to weaken, deflationary tokenomics alone may not be enough to trigger a sustained FOMO rally.

Instead, SHIB is likely to remain more sensitive to broader memecoin capital flows than its own burn rate.

SHIB burn activity surges as memecoin weakness deepens 

The recent 110 million SHIB burn wasn’t an isolated event. 

Instead, it capped off a broader pickup in burn activity.

According to Shibburn data, the Shiba Inu community burned 152 million+ SHIB over the past week, lifting the weekly burn rate by 55.77%. Most of that increase came from the 110 million SHIB burned, marking the network’s biggest single-day burn in six months.

Even so, SHIB’s price continues to ignore the spike in burn activity.

The token is down 5%+ over the past week, showing that lower supply alone hasn’t been enough to shift market structure. The memecoin market tells the story.

During the Q4 2024 rally, memecoins made up more than 10% of the total altcoin market cap. At press time, that share has dropped to just 3.7%, showing that capital has continued to leave the sector.

From a supply-demand perspective, demand clearly remains the limiting factor. 

While token burns continue to reduce supply at the margin, the ongoing outflow of capital from memecoins has more than offset that effect. Until liquidity returns to the sector, demand (not deflationary tokenomics) is likely to remain the primary driver of SHIB’s price.

Final Summary

• SHIB burned 110 million tokens in its biggest burn in six months, but the price is still falling.
• Weak memecoin demand continues to outweigh SHIB’s token burns.