Shiba Inu's burn rate soars, fueling a bullish price outlook

Shiba Inu (CRYPTO:SHIB) has seen a notable increase in its price, reaching $0.000014 after a 4.5% rise over the past 24 hours, coinciding with a dramatic 1088% surge in its burn rate.

This substantial increase in the burn rate, which involves permanently removing tokens from circulation, theoretically reduces the supply and could drive up the token's value.

However, historical data suggests that price movements do not always directly correlate with burn rate spikes, leaving questions about whether this time will be different.

The strategy behind burning SHIB tokens is to create scarcity, which, when coupled with rising demand, can lead to price appreciation.

According to Shibburn, nearly 100,000 tokens were burned recently, adding to the 410.72 trillion tokens already removed from circulation.

While reducing supply can make an asset more valuable, this outcome is only realised if there is a concurrent increase in demand.

The recent price rise indicates growing interest in SHIB, which could further bolster its value if this trend continues.

An important metric to consider is the Sharpe ratio, which measures risk-adjusted returns.

SHIB's Sharpe ratio has improved from -5.43 on August 19, when the price dropped to $0.000012, to -3.87, signaling a potential shift towards better profitability for investors.

A positive Sharpe ratio would indicate a more favorable risk-to-reward scenario, potentially driving the price closer to $0.000018.

On the technical front, SHIB is trading within an ascending channel, a bullish pattern that suggests consistent buying interest.

The Moving Average Convergence Divergence (MACD) indicator also supports this bullish outlook, with the 12-period EMA crossing above the 26-period EMA, indicating dominant buyer activity.

If SHIB can maintain this momentum, its price could rise toward $0.000016.

However, failure to break above the current resistance at $0.000014 could result in a retracement to $0.000012.

At the time of reporting, the Shiba Inu price was $0.00001418.