The Shiba Inu coin price has collapsed more than 35% from its December high and faces further downside risks as the burn rate and Shibarium fees continue to decline.

Shiba Inu (Gray) fell to $0.00002150 on January 6, joining other popular meme coins like Dogecoin (Doug), baby (baby), and Vartcoin.

according to ShipburnSHIB's burn rate continues to decline, which may negatively impact the token's performance in the near term. In the past 24 hours, 8.73 million tokens were burned – a 71% decrease from the previous day.

The likely reason for this significant decline is the poor performance of the Shibarium ecosystem. Data from com.shibariumStats It appears that the number of active accounts on the network has decreased to only 1,250 accounts, which is a relatively small number for a very popular network.

In addition, the average transaction fee on Shibarium fell to 0.00023 BONE, down from the December peak of 0.00045. As a result, the total amount spent on gas fees decreased to 1,715 bhun, equivalent to about $771.

Shibarium's performance is crucial to SHIB's price because the network plays a major role in burning tokens. A portion of the BONE fees generated on Shibarium are converted into SHIB and then burned, reducing the token supply.

Meanwhile, data from Nansen shows that smart money investors are reducing their exposure to SHIB. The number of smart money addresses holding SHIB has fallen to 25, from around 40 in November. This shift may be due to Shiba Inu's poor performance compared to other meme coins, which has led investors to focus on alternatives like Fartcoin and ai16z.

The price of the Shiba Inu may fall further

The daily chart indicates that SHIB price may witness further declines. The token has fallen from a high of $0.000033 in November to $0.00002150 as of today.

The SHIB index fell below its 50-day and 100-day moving averages. More importantly, it forms a bearish flag chart pattern, characterized by a sharp downward movement followed by a consolidation phase inside the rectangle. This pattern is often preceded by a major downward breakout. In this case, SHIB could fall to the next support level at $0.00001082, which would represent a 50% decline from current prices.

On the more optimistic side, there are signs that SHIB is also forming a cup and handle pattern. If this bullish pattern plays out, the recent pullback may be part of a handle section. In this scenario, SHIB could retest the upper limit of the cup before embarking on further gains.