Shiba Inu (SHIB) price is up 50% in the last 9 days, is a correction imminent?

TL;DR

Shiba Inu (SHIB) surged 50% in two weeks, but indicators such as high FOMO and a high RSI point to a potential pullback. The rally is possibly fueled by global market momentum, Shibarium advances, an increase in the burn rate and the expected launch of a Shiba Inu-related stablecoin. More concentration or time for a correction?

Shiba Inu (SHIB) is undoubtedly among the top crypto performers, registering a 50% price increase in less than two weeks. It is currently trading around $0.0000196, which represents a 10-week high. Its market capitalization exceeded $11.5 billion, making it the fourteenth largest cryptocurrency.

SHIB Price, Source: CoinGecko

Despite the overall bullish conditions, some important elements indicate that SHIB’s valuation may go south soon. Crypto analytics platform Santiment estimated that FOMO (Fear of Missing Out) had reached a “significant” level, meaning a local top could be reached.

FOMO is a psychological phenomenon where investors feel anxious about missing out on a potentially profitable opportunity, leading them to make impulsive, emotionally driven decisions. It often occurs when prices are already in an upward trend, coinciding with hype on social media platforms.

Cryptocurrency price increases during periods of high FOMO are often unsustainable as they are driven more by emotions than fundamentals. As such, it could indicate that a pullback could be imminent.

Another factor that suggests that SHIB’s rally could be interrupted soon is the rise in the Relative Strength Index (RSI). The technical analysis tool measures the change and speed of price movements. It ranges from 0 to 100, with readings above 70 indicating that SHIB is overbought and potentially headed for a correction. The RSI is currently set at a seven-month high of 90.

What is fueling the rally?

SHIB’s price resurgence is in line with the bullish condition of the entire cryptocurrency market, with Bitcoin (BTC) trading just south of $66,000, while Ethereum (ETH) broke above $2,650.

Other items that may benefit from its rating include the subsequent advance of the Shibarium layer 2 scale solution and the burn rate, which has exploded by almost 34,000% in the last 24 hours.

Last but not least, the resurgence could be related to the recent announcement that the SHIB team is working on launching a stablecoin called SHI. LUCIE (Marketing Strategist at Shibarium) said the product will see the light of day once the infrastructure is “fully ready, ensuring stability and utility within decentralized finance.”

They also claimed that the stablecoin will provide price stability, greater adoption, improved utility, DeFi integration, community empowerment and other merits.

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