- Despite Shiba Inu (SHIB) experiencing an 8% price surge after breaking out of a long-term triangle pattern, declining network activity and short-term bearish indicators suggest potential selling pressure ahead.
- Investors should remain cautious as underlying metrics signal waning user engagement and distribution across the network.
Shiba Inu (SHIB) has been navigating a complex landscape recently. The meme coin, known for its volatility, traded within a triangle pattern for 75 days, hinting at a potential strong performance. Last week, SHIB finally broke out of this pattern, fueling optimism for the months ahead.
The broader cryptocurrency market has trended bullishly since Monday, September 16th, experiencing around 7% gains. Shiba Inu mirrored this trend with an 8% surge, breaking the $0.000014 resistance level and indicating the potential for another 7%-8% move higher. However, beneath this promising surface, some underlying metrics paint a less rosy picture for SHIB’s immediate future.
Network Activity Decline
One key concern is the decline in network activity. Daily active addresses, which had been on a downward trend from May to July, saw stabilization until late August. Despite a spike in early September, the activity metric has since fallen again, reaching its lowest levels since February. This decline in activity suggests waning user engagement, which could impact SHIB’s price momentum.
Network growth has also been on a downward trajectory since the final week of August. Weighted sentiment, which was strongly positive in August, has taken a hit in September, mirroring the trends in active addresses and network growth. This collective decline indicates that Shiba Inu is unlikely to see a surge in demand from new users in the short term.
Short-term Bearish Sentiment
Analyzing other metrics, the 30-day Market Value to Realized Value (MVRV) ratio was positive, reflecting short-term profits. However, the last noticeable positive spike on August 24th was followed by a sharp 12% price correction over the next three days. This historical pattern suggests that the recent positive MVRV might precede another correction.
Further signs of short-term bearish pressure include a spike in dormant circulation on September 20th, indicating that long-held SHIB tokens are moving, possibly to be sold. Additionally, the mean coin age has been in a downtrend over the past month, showing increased distribution across the network.
Contrasting Indicators: Open Interest and Funding Rate
Interestingly, while several indicators point to short-term bearishness, Open Interest has been increasing alongside prices over the past week, indicating strong bullish sentiment among futures traders. The funding rate, which was highly positive, has dropped over the past 24 hours, hinting at a possible shift in market sentiment.
While Shiba Inu’s recent price action has been promising, underlying metrics suggest caution. The decline in network activity and bearish short-term indicators could lead to increased selling pressure. Investors should closely monitor these metrics to navigate the volatile landscape of Shiba Inu.
