Cryptocurrency The first project that comes to mind when it comes to token burning in the markets is undoubtedly the Shiba Inu (SHIB). The development team behind SHIB continues to run meme coin burning events. The main purpose behind burning is to reduce the circulating supply and ultimately increase the price. But it seems that these burns do not fully affect the price.
Despite about 100 million SHIB being burned daily, meme coin value continues to be driven largely by speculative interest rather than the amount of the burn. This raises the question of why the amount of incineration might be ineffective.
As a first explanation, it can be said that the burn mechanism does not take into account the psychology of market participants. The amount of meme coins burned on a daily basis may seem significant in theory, but in practice it may not be perceived as such by investors. Moreover, the amount of burning may not be enough to reduce the supply of SHIB.
Another factor that may affect the efficiency of the incineration mechanism may be the large quantities in the hands of whales. These deep-pocketed investors may not be willing to participate in the burn process because they do not see the benefit of reducing the supply or because they want to maintain their control over the token.
Besides, the speculative interest around the token may be driven by factors other than the burning mechanism. For example, the popularity of SHIB on social media and the support of high-profile figures can increase demand for SHIB regardless of the amount of meme coins burned.
You can check the price movements here.