On Wednesday, Shiba Inu (SHIB) saw a minor decline of 0.1% following a pivotal loss of a key accumulation zone. Despite this, on-chain and technical indicators suggest that the meme coin might experience a brief rally if certain conditions are met.
On-Chain Metrics Indicate Buy Zone Potential
Recent data from IntoTheBlock highlights that approximately 73% of SHIB tokens are currently held at a loss. This follows the loss of the critical support level at $0.000017, which was previously the main accumulation zone for SHIB. At this level, investors had purchased around 496.48 trillion SHIB tokens.
This large accumulation zone is significant because reclaiming this support level could establish a new critical support for SHIB. Conversely, if the price fails to recover and investors decide to sell once they break even, it could lead to further declines.
Santiment’s data reinforces this notion. A noticeable spike in the movement of SHIB coins that had been dormant for over a year was observed on July 18 when SHIB’s price touched the $0.000017 mark. This was accompanied by a similar spike in exchange flows, indicating high volatility and potential sell pressure around this price point.
Despite the recent market crash on August 5, SHIB investors did not experience the typical major spikes in net flows or dormant coins, suggesting that the impact on SHIB has been relatively muted compared to broader market movements
.Additional on-chain metrics include a decline in the Weighted Sentiment of SHIB to -0.7 and a 30-day Market Value to Realized Value (MVRV) Ratio at -11.9%. This indicates that, on average, SHIB investors within the last month are experiencing an 11% loss. These indicators suggest that SHIB may still be in a potential buy zone, particularly given the large proportion of coins held at a loss.
Technical Indicators and Resistance Levels
SHIB’s technical indicators present a mixed outlook. The coin recently posted a “Golden Cross,” where the 100-day Simple Moving Average (SMA) crossed above the 200-day SMA. This pattern is often seen as a bullish signal, suggesting the potential for an upward trend.
However, an earlier “Death Cross” occurred on July 17 when the 50-day SMA crossed below the 100-day SMA. This could act as resistance for any potential upward movement. Additionally, SHIB is facing resistance from a descending trendline that dates back to March 8.
The next major target for SHIB is the 38.2% Fibonacci retracement level, which is approximately $0.0000144. A significant breach of this level could challenge the current bearish thesis. Conversely, if SHIB breaks above $0.0000870, it may negate the current bearish outlook and lead to a substantial correction.
Broader Market Influences
It’s essential to note that SHIB’s price movements are often influenced by Bitcoin’s performance. As a meme coin, SHIB tends to mirror the price trends of Bitcoin. Therefore, monitoring Bitcoin’s price trends will be crucial in predicting SHIB’s future movements.
In summary, while Shiba Inu faces critical resistance levels and technical challenges, its on-chain metrics suggest potential for a brief rally if key support levels are reclaimed. Investors should remain vigilant and consider both technical and on-chain data when evaluating SHIB’s prospects.
August 2024, Cryptoniteuae
