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Shiba Inu ($SHIB) has underperformed the wider cryptocurrency market since the start of the year. However, a recent development concerning the token’s exchange reserves could herald the beginning of a move to the upside.

Despite once being one of the most popular meme coins, in recent years, it has become significantly overshadowed by Dogecoin (DOGE). As a response, the project has shifted its focus toward utility — and while positive developments abound, this has failed to translate to an upward motion on the price chart.

At press time, $SHIBwas changing hands at a price of $0.00001251, with a 1.48% pullback on the weekly chart bringing year-to-date (YTD) losses up to 42.25%.

So, what about that exchange reserve development we pointed to as a positive bullish catalyst? Per data retrieved by Finbold from market intelligence platform CryptoQuant, the amount of $SHIBtokens held on cryptocurrency exchanges has hit an all-time low of 85.3 trillion. For reference, that amounts to just 14.4% of the cryptocurrency’s circulating supply.

Why is this a good thing for $SHIBbulls? Beyond simply abating selling pressure, it’s a clear indication that a large number of tokens is being transferred to private wallets — which suggests the application of long-term, buy-and-hold strategies as opposed to trading. While tightened supply tends to increase volatility, with the steady growth that the asset’s user base has experienced, this could end up pushing prices upwards.

Beyond the exchange reserve, a variety of bullish factors are at play with $SHIB.

Despite a challenging environment and recent setbacks, $SHIBmaintains a large, devoted community, which recently reached the 1.5 million mark. The introduction of BONE, a governance token, and TREAT, which is designed to incentivize community engagement herald further advances in the wider ecosystem’s utility — and Shibarium, the project’s layer-2 scaling solution, has reached the 10 million block milestone.

Although burn rates more than halved in the two days following the 13,591,737 March 17 peak, as of press time on March 21, the burn rate of $SHIBappears to be trending upward, per Shiba Burn Tracker. In the last 24 hours, users have burned 14,052,230 tokens. This indicates a healthy level of both long-term bullishness and community engagement regarding Shiba Inu’s supply dynamics.

As an aside, readers should note that, although the burn rate is, as the chart above demonstrates, volatile, it has generally increased since Finbold first broached the topic in late January.

Featured image via Shutterstock

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