Shiba Inu (SHIB) is showing signs of a potential price breakdown as its recent recovery falters. The decline is attributed to weakening market sentiment, a drop in the token burn rate, disappointing whale activity, and a falling total value locked (TVL) on Shibarium. Technical indicators suggest that SHIB could be poised for a significant correction in the near term.
As of the latest data, SHIB is trading at $0.00001343 with a 24-hour trading volume of approximately $117 million. This volume is notably lower compared to other leading meme coins such as Dogecoin ($820 million) and Pepe ($935 million), indicating reduced market participation and interest.
Technical Analysis Points to Bearish Signals
A detailed look at the daily chart reveals that Shiba Inu found a local bottom at $0.00001029 in April during a broad cryptocurrency market downturn. It then began a gradual recovery, forming an ascending channel by connecting its series of lower highs and higher lows.
However, the recovery appears to be losing momentum. The Average Directional Index (ADX), which measures trend strength, has fallen to a level of 15. An ADX reading below 20 typically indicates a weak trend, suggesting the buying pressure is fading.
Furthermore, SHIB continues to trade below both its 50-day and 100-day Exponential Moving Averages (EMAs), reinforcing the notion that the recovery is fragile and far from decisive. The Relative Strength Index (RSI) has also turned downward and moved below the neutral level of 50, another signal that bearish momentum may be building.
The price action has also formed what technical analysts refer to as a bearish flag pattern. This pattern, often seen as a continuation signal, consists of a sharp downward move (the flagpole) followed by a period of consolidation (the flag). A breakdown from this pattern could see SHIB retest its April low of $0.00001030, representing a potential decline of roughly 22% from its current level.
A move above the 100-day EMA, situated around $0.00001440, would be required to invalidate this bearish short-term outlook.
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Underlying Fundamentals Show Weakness
The potential price decline is not solely based on technicals; several key on-chain and ecosystem metrics are also flashing warning signs for Shiba Inu.
Declining SHIB Burn Rate
The SHIB burn mechanism, designed to reduce the token's circulating supply over time, has seen its effectiveness wane. Data shows the daily burn rate plummeted by 54% in a recent 24-hour period, with only 18.08 million SHIB tokens (valued at roughly $240) being permanently removed from circulation. For a meme coin with a market capitalization exceeding $7 billion, this burn rate is considered negligible and fails to impact the token's scarcity meaningfully. A declining burn rate often negatively impacts investor sentiment.
Shibarium TVL Continues to Fall
Shibarium, the layer-2 blockchain network launched to support the Shiba Inu ecosystem, has struggled to gain significant adoption from developers and users. Its Total Value Locked (TVL), a key metric indicating the health of a decentralized finance (DeFi) ecosystem, has fallen considerably. According to available data, the TVL has dropped to approximately $3.1 million, down from a year-to-date high of over $7 million. This decline suggests a lack of activity and confidence in the network's applications.
Whale Activity Turns Negative
Large holders, often called "whales," have begun reducing their exposure to SHIB. On-chain analytics indicate that addresses holding significant amounts of SHIB have decreased their collective holdings from a 30-day high of 733 million tokens to around 722.4 million. This selling pressure from influential investors can often trigger fear and mimic selling among smaller retail holders, further exacerbating a price downturn.
Market Outlook and Conclusion
The confluence of weakening technical indicators and deteriorating fundamental metrics places Shiba Inu price at a heightened risk of a substantial correction. The bearish flag pattern on the charts, combined with a falling burn rate, declining Shibarium TVL, and net selling by whales, creates a challenging environment for SHIB. If the selling pressure intensifies, the price could revisit its yearly low.
Frequently Asked Questions
Is Shiba Inu (SHIB) price expected to drop?
Yes, technical analysis suggests a bearish breakdown is possible. Key indicators like the RSI and ADX show weakening momentum, and the formation of a bearish flag pattern points to a potential continuation of the downtrend.
How far could the SHIB price fall?
If the bearish technical pattern plays out, analysts project a potential decline of around 22%, which would bring the price down to retest its April low near $0.00001030.
What are the main reasons for the negative SHIB outlook?
The outlook is influenced by several factors: a significant decrease in the daily SHIB burn rate, a falling TVL on the Shibarium network, and observable selling pressure from large wallet investors (whales).
Does trading volume play a role in SHIB's price action?
Absolutely. SHIB's current 24-hour trading volume is significantly lower than that of its main meme coin competitors. Low volume often indicates a lack of conviction behind price moves and can lead to increased volatility.
What would invalidate the bearish forecast for Shiba Inu?
A decisive breakout above key resistance levels, particularly a sustained move above the 100-day Exponential Moving Average at approximately $0.00001440, would challenge the current bearish thesis and could signal a shift in momentum.
Where can I find more information on conducting my own research?
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