- Shiba Inu fell 11% after traders took profits, bringing a key support zone between $0.0000042 and $0.00000485 into focus.
- A drop in token burns and over $2.1 million in long liquidations suggest the market is cooling, though buyers could still defend the bullish trend.
Shiba Inu (SHIB) gave back part of its recent gains after a sharp rally, falling about 11% over the past 24 hours. The decline came as traders locked in profits following a strong breakout that briefly made SHIB one of the best-performing large-cap memecoins.
Despite the pullback, analysts believe the broader trend has not necessarily turned bearish. Instead, attention has shifted to a key technical zone that could determine whether buyers return and push SHIB higher.
SHIB Approaches a Critical Support Area
The recent rally left behind an imbalance zone between $0.0000042 and $0.00000485. In technical analysis, this is an area where price moved so quickly that little trading occurred, often attracting buyers if the market revisits it.
SHIB is now moving back toward this range after its latest decline. If buyers step in, the zone could provide support and help the memecoin resume its upward trend.
The midpoint of the imbalance zone, around $0.00000456, may serve as the first level to watch during the current correction.
Even with the recent drop, SHIB continues to trade above both its 20-day and 50-day EMAs. This suggests the broader trend remains positive unless those support levels fail.
Technical Indicators Point to Short-Term Weakness
The Stochastic RSI, which climbed into overbought territory during SHIB’s recent rally, has started moving lower. This suggests the strong buying activity seen over the past few days is fading, increasing the likelihood of a short-term correction before buyers regain control.
Such pullbacks are common after sharp rallies because they help cool overheated market conditions and reduce excessive speculation. If buyers step in at key support levels, the correction could strengthen the foundation for another move higher rather than signal a complete trend reversal.
Falling Burn Rate Adds Pressure
The price decline is not driven by technical factors alone.
Shiba Inu’s burn rate dropped sharply over the past 24 hours. Token burns permanently remove SHIB from circulation, reducing supply over time. Higher burn activity can support bullish sentiment, while slower burns may weaken one of the factors that previously helped fuel the rally.
Although burn rates fluctuate regularly, the latest decline removes some of the supply-side support that traders had been watching.
Long Liquidations Signal a Market Reset
The derivatives market also reflected the recent weakness.
More than $2.1 million in leveraged long positions were liquidated as SHIB’s price fell. These forced liquidations suggest that many bullish traders using leverage were caught off guard by the correction.
However, this does not automatically signal a long-term trend reversal. Instead, it may indicate that the market is clearing excessive leverage before making its next move.
Outlook for Shiba Inu
SHIB’s short-term direction now depends on whether buyers defend the $0.0000042–$0.00000485 imbalance zone.
A strong reaction from this area could stabilize the price and support another move higher. On the other hand, a break below the zone may lead to deeper losses as selling pressure increases.
For now, traders will closely watch this support level, along with burn activity and derivatives data, to see whether SHIB’s recent correction turns into a buying opportunity or develops into a larger pullback.
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