These factors suggest an extended correction

TL;DR

The Shiba Inu price has fallen substantially of late, with declining consumption rates and high transaction volumes indicating continued bearish momentum. On the other hand, the reduction in exchange reserves and SHIB’s RSI near oversold territory suggest that there may be a potential rally on the horizon. The bad days for the bulls may not be over

The past two weeks have been pretty successful for most of the major cryptocurrencies. Bitcoin (BTC), for example, saw its price increase by 10%, while Ethereum (ETH) rose by 4%.

However, some assets have not performed so well. The popular Shiba Inu meme coin is among the big losers, with its valuation plummeting more than 15% during this period. It is currently trading around $0.00002575 (according to data from CoinGecko), which represents a decline of 6% on a daily basis.

SHIB Price, Source: CoinGecko

Some chain factors and metrics indicate that bears could continue to prevail in the near future. An example is the red wave that runs through the entire meme coin sector. The market cap of the niche has dropped by 4% in the last 24 hours, with assets known as Dogecoin (DOGE), Pepe (PEPE), dogwifhat (WIF), Bonk Inu (BONK), Floki Inu (FLOKI), Peanut. l’Esquirol (PNUT), and many more registering substantial losses.

Another element worth mentioning is the Shiba Inu’s combustion mechanism. The data shows that the burn rate has decreased by almost 70% in the past week, resulting in only 128 million tokens sent to a null address. The ultimate goal of the program is to reduce the huge supply of SHIB, making it scarcer and potentially more valuable (assuming demand doesn’t head south).

The Shiba Inu team and community have burned over 410 trillion tokens since adopting the mechanism. However, the circulating supply remains quite significant, equivalent to approximately 589 trillion SHIB.

Last but not least, we will focus on Shiba Inu’s high transaction volume (a momentum indicator that shows the number of transactions over $100,000). According to IntoTheBlock, the metric is down 4.2%, entering bearish territory.

It’s not all Doom and Gloom

On the other hand, there are some indicators that suggest that SHIB could soon be back on the green track. One example is the Shiba Inu exchange reserve, which, according to CryptoQuant, has recently plummeted to levels last seen in the spring of 2021.

The development signals a shift from centralized platforms to self-custody methods, which could be considered bullish as it reduces immediate selling pressure.

Last but not least, we will discuss SHIB’s Relative Strength Index (RSI). The technical analysis tool measures the speed and change of price movements, ranging from 0 to 100. It helps traders identify oversold or overbought conditions, with readings below 30 suggesting a potential buying opportunity.

SHIB’s RSI has been trending down for the past week, currently sitting slightly above the bullish zone.

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