The Shiba Inu (SHIB) token is struggling to recover its price, a failure analysts attribute to fundamental structural challenges rather than simple market volatility.
This assessment follows new analyses declaring that SHIB’s goal of reaching the $0.0001 price level is a “dead end road” given the token’s core deficiencies.
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The Structural Challenge: Supply Overhang vs. Delayed Deflation
This harsh outlook is underscored by cold on-chain data: the Total Value Locked (TVL) on its layer-2 solution, Shibarium, has fallen and remained consistently below $1 million since early October, exposing a critical lack of ecosystem utility and adoption.
Shibarium TVL Throughout 2025. Source: DeFiLlamaSHIB faces the core conflict: a mismatch between its massive circulating supply and the slow pace of its deflationary mechanism. SHIB’s ecosystem was designed to utilize its layer-2 network, Shibarium, to burn tokens and reduce the total supply of approximately 589 trillion tokens.
However, the low TVL on Shibarium continues. This is a fraction of the network’s theoretical potential. Therefore, the token burn rate significantly lags market expectations. This stagnation suggests that development efforts have not translated into meaningful network activity or user adoption.
Given that SHIB’s market capitalization is still in the billions, a TVL below $1 million is a stark indicator that decentralized applications (dApps) and users are not embracing the chain at the scale required.
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Analysts interpret this technical failure as the primary structural reason. They increasingly view ambitious price targets like 0.0001 as unrealistic. The sheer scale of the token supply requires a massive, sustained deflationary pressure that the current ecosystem is failing to provide.
The Utility Deficit and Capital Flight to AI/DePIN
A secondary but critical factor that drives SHIB’s struggle is the ongoing rotation of capital within the crypto market. This capital is moving toward sectors that offer tangible utility. As the broader Web3 trend shifts decisively from “meme” to “utility,” SHIB is losing ground to projects that provide real-world value.
In the second half of 2025, capital has favored sectors like AI compute (e.g., Bitfarms’ pivot) and DePIN, projects that generate revenue from data, computation, and enterprise efficiency. These utility-driven tokens offer clear fundamentals beyond speculation.
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Conversely, SHIB struggles to shed its “meme coin” image. The lack of TVL confirms that Shibarium has not found a unique, compelling use case. It needs this to attract developers and users away from established Layer-2 networks.
The sustained utility deficit means that whales and savvy money investors opt to divest from SHIB and redirect capital to these higher-growth, utility-focused sectors.
Community Resilience and the Competitive Landscape
Despite the long-term structural issues, community efforts show resilience. Data released yesterday indicates that SHIB token burns surged by over 42,000% in the past 24 hours, leading to a modest price increase to $0.00001062.
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The capital flight is not limited to utility tokens; it also targets alternative meme projects that promise aggressive tokenomics. One prominent figure noted on X that “the smart ones are rotating to Shib on Base,” citing a 32.6% supply burn and “AI-driven utility” as key drivers.
This active competition highlights that investors now actively seek faster burn mechanisms and verifiable utility. This forces the original SHIB project to compete with AI tokens and newer, more aggressive meme coin models.
For SHIB to maintain relevance and pursue price recovery, its team must urgently demonstrate measurable and innovative utility. This requires more than just community hype. Instead, it demands attracting significant liquidity and developer engagement to Shibarium. This action ultimately proves that the token functions as a critical piece of Web3 infrastructure
The recovery of Shibarium’s TVL is the necessary first signal that SHIB can break free from its structural constraints.
Source: https://beincrypto.com/shibs-utility-deficit-shibarium-tvl-exposes-structural-flaw/
