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SHIB Market Cap Drops 3 Times More Than Its Price, But Why Is It Good Thing?

Fri, 06/03/2022 - 10:12
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Gamza Khanzadaev
Shiba Inu market cap decline is more dramatic than its price drop, but it is not really bad signal
SHIB Market Cap Drops 3 Times More Than Its Price, But Why Is It Good Thing?
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According to the latest TradingView data, the capitalization of Shiba Inu as of today is down by more than 5.5%, while the price of SHIB coin itself suffers a decline of three times less, at around 1.8%. Thus, at the time of writing, the capitalization of the project is $6.01 billion, and the price of SHIB is $0.000011 per coin.

Nevertheless, such a large gap in the decline should not upset the fans and holders of the much-loved memecoin, which in the opinion of many in the #ShibArmy should not be considered a memecoin anymore. This is especially true against the background of the large-scale use of the coin as a means of payment and its integration into the ranks of payment systems.

Source: TradingView

So why is this good news?

Market capitalization, to put it simply, is a product of the number of coins circulating and the price of each of them. With a certain precise number of coins, one would expect the capitalization and price of a coin to move the same way.

However, Shiba Inu is not such a simple project, as the number of SHIB coins according to the consensus established by the community and project developers is constantly being burned.

In recent days, the Shiba burning rate often showed encouraging values, and on June 2 it even showed an incredible spike of 190%. It can be safely assumed that as a result of increased burning, the number of SHIB coins in circulation is constantly decreasing, but because the market environment drags the coin's price down, the capitalization of Shiba Inu decreases more harshly.

In good news, with the same degree of certainty it can be assumed that when bullish sentiment prevails on the market again—and if, of course, the project survives a possible crypto winter—SHIB will be able to show market-outperforming growth, while the "diamond hands" fans will be generously rewarded for their loyalty.

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About the author

Financial analyst, trader and crypto enthusiast.

Gamza graduated with a degree in finance and credit with a specialization in securities and financial derivatives. He then also completed a master's program in banking and asset management.

He wants to have a hand in covering economic and fintech topics, as well as educate more people about cryptocurrencies and blockchain.