Shiba Inu at Crossroads: Rally Signs vs Shibarium Woes

Shiba Inu (SHIB) has been on a pronounced downward trajectory since the beginning of the year, with its value plummeting to approximately $0.00001223 as of the latest data. This represents a significant 42% decline from its price on the first day of 2025. The asset’s market capitalization has correspondingly plunged to $7.2 billion, reflecting a substantial loss of investor confidence and market value. This downturn has allowed competitors to gain ground; both MemeCore (M) and Pepe (PEPE) have started closing the gap to SHIB, intensifying the pressure on the once-dominant meme coin.

The broader context of this decline underscores the volatile nature of the meme coin sector, where investor sentiment can shift rapidly based on technical developments, community activity, and market dynamics. For SHIB, the challenge is not only to arrest the slide but also to fend off increasingly assertive rivals in a crowded marketplace.

Despite the gloomy price action, three key factors suggest that a SHIB recovery could be imminent. First, the Shiba Inu burn rate has exploded by an astonishing 200,000% in the past 24 hours, resulting in hundreds of thousands of tokens being permanently removed from circulation by sending them to a null address. While the immediate U.S. dollar value of the destroyed tokens is negligible, this aggressive burning mechanism gradually reduces SHIB’s overall supply. If demand remains stable or increases, this supply reduction could create upward pressure on the token’s price over time.

Second, SHIB’s exchange netflow has turned negative over the past week, according to data from CryptoQuant. A negative netflow indicates that more tokens are leaving centralized exchanges than are being deposited. This trend suggests that investors are moving their SHIB holdings into self-custody methods, such as personal wallets. This migration typically reduces immediate selling pressure on exchanges, as tokens in self-custody are less likely to be sold impulsively during market downturns.

Third, Shiba Inu’s Relative Strength Index (RSI), a momentum oscillator that measures the speed and magnitude of price changes, recently dipped to 20. This reading, sourced from CryptoWaves, represents the lowest level observed in the past three months. An RSI below 30 traditionally signals that an asset has entered oversold territory, potentially setting the stage for a technical rebound. Although the RSI has since moved slightly higher, it remains close to this bullish zone, suggesting that the selling pressure may be exhausting itself.

Counterbalancing these positive indicators are serious concerns surrounding Shibarium, the layer-2 blockchain solution designed to support the Shiba Inu ecosystem. The network’s activity has weakened considerably in recent weeks. Daily transactions on Shibarium, which were numbering in the millions earlier this year, have plummeted to under 20,000. This dramatic drop in usage raises questions about the network’s utility and adoption, which are critical for the long-term viability of the SHIB token.

Compounding these concerns was a security incident in mid-September. Reports indicated that an attacker used a flash loan to purchase 4.6 million BONE tokens. However, LUCIE, the pseudonymous marketing strategist for Shibarium, provided clarification, stating that the protocol itself was not hacked. Instead, the issue stemmed from stolen validator keys that were used to push a fake state. LUCIE assured the community that investor funds remained safe because they are secured in multisig cold storage. Despite this reassurance, the incident has undoubtedly damaged confidence in the network’s security infrastructure.

Shiba Inu currently stands at a critical juncture. The technical indicators—the massive token burn, negative exchange netflows, and oversold RSI—paint a picture of an asset that may be primed for a short-term rally. These factors suggest that the most intense selling pressure has subsided and that a rebound could be technically justified.

However, the fundamental challenges cannot be ignored. The weak activity on Shibarium and the lingering doubts from the security breach represent significant headwinds. For SHIB to reclaim its former glory and solidify its position against competitors like MemeCore and Pepe, it must demonstrate renewed utility and robust ecosystem growth. The conflicting signals create a high degree of uncertainty, leaving investors to weigh the potential for a technical rebound against the sobering realities of its underlying platform’s struggles.