Shiba Inu, a prominent meme coin, is currently at a critical juncture, navigating a period characterized by significant past challenges and emerging signals of a potential recovery. After a difficult 2025 that saw its price decline and its network face a major security breach, the early days of 2026 have ushered in a renewed sense of optimism, hinting at a possible shift in its long-term market trajectory.
Overcoming Setbacks: The Shibarium Exploit and Market Volatility
The year 2025 proved arduous for Shiba Inu, as it struggled to regain previous highs and instead entered a prolonged downtrend. This challenging period included a substantial security incident in September 2025, where Shibarium, Shiba Inu's Layer-2 blockchain, was exploited. A hacker manipulated network checkpoints and strategically staked BONE tokens, reportedly draining approximately $4.1 million in various cryptocurrencies and forcing an automatic system shutdown. In response, the Shibarium team swiftly implemented blacklisting mechanisms and planned a phased restart of paused bridges, prioritizing user asset security and recovery. This exploit, combined with a broader market downturn referred to as the "$19 billion October wipe-out," contributed significantly to SHIB's inability to match the peak performances seen across much of the crypto market.
Shifting Dynamics: Burn Rate and Potential Reversal Signals
Despite these recent adversities, crucial underlying dynamics for Shiba Inu are beginning to signal a change in momentum. The SHIB burn rate, a vital ecosystem metric designed to reduce token supply and enhance scarcity, experienced a notable surge in late 2025 and early 2026. This increased burning, partly fueled by gas fees on the Shibarium network, aims to foster positive sentiment and acts as a deflationary mechanism that has historically preceded periods of growth. From a technical perspective, Shiba Inu appears to be reaching a potential inflection point. After months of sustained decline, the "character of the sell-off has shifted," with aggressive selling by whales largely halting by mid-December. The price has since compressed into a narrow range, suggesting seller exhaustion rather than a renewed bearish conviction. With the Relative Strength Index (RSI) spending an extended period in neutral-to-oversold territory and an absence of clear lower lows, there are growing indications that the panic phase is subsiding, making further downward pressure increasingly difficult for bears. While SHIB remains in a broader downtrend, its momentum appears stretched, hinting at a potential near-term price rebound that could see it "remove a zero" and return to its November 2024 price range of $0.000035-$0.000049.
