Shiba Inu (SHIB) has strengthened against its main “memecoin” rival Dogecoin (DOGE) over the past two months, thanks in part to periodic token burning events and a flurry of project announcements that promise to strengthen his utility.
Why is the SHIB price going up?
In detail, SHIB/DOGE gained just over 40% after rebounding from 0.0001120 on May 12, its lowest level on record.
Coin burn is the most logical explanation behind SHIB’s recent rally against DOGE.
The process involves sending SHIB tokens to a masterless wallet, i.e. removing them permanently from circulation against the total supply of one quadrillion (half of which was sent to the co-founder of Ethereum, Vitalik Buterin.
The Shiba Inu Network has burned over 410 trillion SHIB tokens (~$4.5 billion at current price) from its initial supply, according to data tracking portal ShibBurn.com.
Dogecoin does not have a coin burn feature and comes with an uncapped supply. This could give traders a reason to hoard SHIB on DOGE, especially during a crypto bear market when almost all digital assets fall against the US dollar.
JUSTINE: $SHIB @Shibtoken is back in the top 10 bought tokens among the 1000 largest #ETH whales in the last 24 hours
Check out the top 100 whales here: https://t.co/jFn1zIOq03
(and hold $BBW to see the top 1000 data!)#SHIB #whalestats #babywhale #BBW pic.twitter.com/2o5A0yhHy4
— WhaleStats – BabyWhale ($BBW) (@WhaleStats) July 5, 2022
As a result, SHIB’s losses against the US dollar since May 12 stand at around -7.5% compared to DOGE’s losses of 17.5% over the same period.
The Shiba Inu ecosystem is growing
The launch of Shiba Inu came with the promise that it would be a better version of Dogecoin.
The project attempted to do this by offering potential applications, such as smart contracts and a proprietary decentralized exchange called ShibaSwap that allows users to stake SHIB for “BONE” and “LEASH”, two other tokens in the Shiba Inu ecosystem. .
On July 6, pseudonymous Shiba Inu developer Shytoshi Kusama (not to be confused with blockchain project Kusama) teased subscribers with the launch of an “algorithmic stablecoin” called SHI, paired with a reward token “TREAT and a collectible card game for its metaverse.
On the other hand, Dogecoin has Elon Musk, the CEO of Tesla and SpaceX, who has already enabled DOGE payments at companies’ online merchandise stores and is toying with the idea of doing the same on Twitter.
Earlier this week, Musk’s Boring Company also enabled Dogecoin payments for its “Loop” transit system in Las Vegas.
What’s next for SHIB/DOGE
SHIB’s ongoing rally against DOGE is in danger of running out due to a classic bearish reversal pattern.
Notably, SHIB/DOGE fluctuated inside an ascending wedge, defined by two ascending and converging trendlines. Bullish wedges usually resolve after prices break below their lower trendlines, accompanied by an increase in trading volume.
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In theory, the breakout move could pull the price to the level whose length is equal to the maximum distance between the upper and lower trendlines of the wedge. The table below shows SHIB/DOGE in a similar configuration.
As a result, the pair is likely to fall into the 0.0001233-0.0001348 range based on its breakout point, a 15-20% decline from current price levels.
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