Shiba Inu (SHIB), one of the biggest memecoins on the market, is still far from its glory days. The token is trading over 90% below the all-time high it reached in October 2021.
Even with gains of around 5% during the April price action, the recovery in the broader context appears limited – especially as investors weigh the long-term forces that could lift or hold a token.
No quick scarcity, greater disadvantage
A recent Motley Fool report points to several structural factors that have helped shape Shiba Inu’s current performance and could continue to influence its next step.
One of the biggest problems is the supply of the currency. SHIB’s total supply is roughly 589.5 trillion tokens, with almost the entire supply already in circulation. Although a large part was taken out of circulation in 2021, the remaining amount is still so large that it does not change the overall picture.
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The report highlights that the volume of supply makes it difficult to tighten Shiba Inu in a way that would have a noticeable impact on price.
To illustrate how challenging a meaningful reduction in supply would be, the report notes that even if 1 trillion tokens were permanently deleted every day for an entire year, hundreds of trillions would remain. In practical terms that means supply-driven scarcity This is unlikely to happen quickly enough to lead to a large upward repricing.
At the same time, the report highlights a key drawback that works in the opposite direction: there is no comparable built-in mechanism that quickly reduces supply when demand weakens.
Near-zero warning for Shiba Inu
The report also warns of the risk of a slow, sustained decline. It suggests that as investor attention fades and capital turns to other cryptocurrencies, such as Bitcoin (BTC) and Ethereum (ETH), SHIB’s combination of high supply and limited scarcity could make it vulnerable to continued downward pressure.
In that scenario, the report goes so far as to say that Shiba Inu could drift to near-zero levels by the end of 2026, not as a sudden collapse, but due to prolonged weakness.
In addition to the supply mechanism, the report also points to SHIB’s ownership and distribution. It is claimed that the supply of the token is concentrated among a small number of wallets. According to the report, the top 10 wallets comprise more than 60% of SHIB’s total offering.
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This is important because SHIB’s price, the report suggests, is heavily influenced by trading behavior.who buys and who sells at any time. When large holders control a substantial portion of circulating tokens, their decisions can have an outsized effect.
If a few large portfolios choose to sell, the additional supply could weigh on the price. At the same time, the report notes that many of the remaining Shiba Inu holders are small retail investors, who typically have limited capital to absorb large sales orders.
The report links this to a reinforcing cycle. As Shiba Inu prices decline, investor interest often declines further. This can lead to reduced trading volume and thinner liquidity, making the market more sensitive sales pressure.
At the time of writing, SHIB was trading at $0.0000063, marking a slight increase of 1.8% over the past seven days.
Featured image created with OpenArt, chart from TradingView.com