Two-thirds. That's how much of the value of Shiba Inu (SHIB 0.98%) has disappeared so far in 2022. Even the biggest fans of the meme coin aren't woofing it up much these days.

However, there's at least one reason for hope. Increasingly more Shiba Inu holders are burning their tokens. Can Shiba Inu even burn its way to $0.001?

An easy answer

There's an easy answer to this question: Yes. Absolutely, positively, undeniably yes. Shiba Inu certainly can burn its way to $0.001. The path to achieving the goal is strikingly simple.

All we have to do is look at the economic laws of supply and demand. While there are several laws, the relevant one, in this case, is that if the supply of something decreases and demand stays the same, the price will increase.

Burning reduces the supply of Shiba Inu tokens in circulation. Assuming the demand for the cryptocurrency doesn't fall, continued burning will sooner or later push SHIB's price to $0.001. But how much burning would it take?

There are currently 549.1 trillion Shiba Inu tokens. SHIB's price right now is around $0.0001058. Let's assume that Shiba Inu's current market cap of $5.81 billion doesn't change. To boost SHIB's price to $0.001, the number of tokens in circulation would need to be reduced to around 5.8 trillion.

A few months ago, the Shiba Inu Discord moderator known as SHIBQueenie tweeted some estimates about burning. She projected that roughly 88.8 trillion SHIB tokens could be burned each year with burning portals on ShibaSwap and the upcoming Shibarium layer-2 solution. 

If we use SHIBQueenie's number, it would take in the ballpark of six years to burn enough SHIB tokens to reach $0.001. That doesn't sound overly daunting, right?

Big obstacles

Unfortunately, the obstacles are bigger than you might think. For one thing, Shiba Inu top developer Archangel specifically warned earlier this year that burning 90% of SHIB tokens wasn't going to happen. To increase SHIB's price to $0.001 would require burning nearly 99% of the tokens currently in circulation.

There's also another concern about the rewards for burning Shiba Inu tokens. Those rewards are paid on a 1-for-1 basis in another cryptocurrency, Ryoshi's Vision. The bad news is that RYOSHI tokens aren't nearly as valuable as SHIB tokens. 

But there's an even more worrisome challenge. Remember that the law of supply and demand that was referenced earlier assumes that demand will stay the same. However, we've clearly seen the demand for Shiba Inu drop in recent months.

Maybe this demand will rebound relatively quickly. A case could be made, though, that the luster of many cryptocurrencies has been permanently tarnished after the massive sell-off this year. 

Weighing the odds

Sure, Shiba Inu could burn its way to $0.001. But what are the odds that it will actually do so? My view is that they're quite slim.

I do think that an aggressive burning strategy is prudent for Shiba Inu. However, more will be needed for the beaten-down coin to return to its winning ways of the past. The launch of Shibarium could help. So could the introduction of the Shiba Inu metaverse. 

Ultimately, the most important prerequisite for Shiba Inu to have a shot at reaching $0.001 is for investors to again become excited about the token. Perhaps burning will improve the chances of that happening. But there's no guarantee that it will.