Shiba Inu (SHIB 0.18%) is among the leading so-called meme tokens in the market. This is a token that tends to rise and fall on the basis of animal spirits, with speculators and traders largely driving outsize moves in this particular cryptocurrency utilizing (in many cases) leverage to place bets on the direction this token will head over short periods of time.
Interestingly, Shiba Inu is on the move today thanks to a fundamental catalyst investors appear to be grasping onto. The marketwide rally in risk assets certainly hasn't hurt the token, which is up 5.5% over the past 24 hours as of 1:30 p.m. ET.
Token burn metrics surge amid new announcement
As is the case with other major cryptocurrencies that lack the sort of cash flows, revenue, earnings, and any real fundamentals that typically underpin most other asset classes, supply and demand is the key story with respect to meme tokens like Shiba Inu.
During previous rallies, such as those seen immediately following the onset of the pandemic, supply didn't really matter. It was all about the out-of-this-world demand for speculative assets that have the potential to outpace an already fast-moving equity market. In that environment, investors were focused mainly on what the next big demand driver would be for Shiba Inu and its meme token peers.
But with demand settling down (and by most metrics declining considerably from recent euphoric peaks), investors are increasingly focused on Shiba Inu's supply. Previously a very inflationary token (with new tokens continuously being minted to compensate developers and insiders for their work and early investments in the project), Shiba Inu has hit its max supply cap.
Accordingly, how many Shiba Inu tokens are removed from circulation matters a great deal to how this token tends to perform. So, the announcement from the Shiba Inu team that more than 500 million Shiba Inu tokens were permanently removed from circulation over the past day is a big deal. This move appears to be part of the team's focus on bringing its supply down over time, utilizing the revenue generated from its ecosystem to reward existing investors.
And on the demand front, Shiba Inu's Layer-2 network, Shibarium, also reported a notable increase in activity, which does appear to be spurring more interest in these tokens for the time being.
