Shiba Inu’s 18% rise meets market caution – Is SHIB overheated?

Shiba Inu’s trading volume dipped while its price surged.
The Fear and Greed Index showed that the market was in an “extreme greed” phase.

As a seasoned researcher with years of experience in the cryptocurrency market, I’ve seen my fair share of price surges and corrections. The recent rally of Shiba Inu [SHIB] has indeed been impressive, but I can’t help but feel a sense of déjà vu.

The digital currency Shiba Inu (SHIB) is back in the spotlight due to a significant surge in its value. While this uptrend has been advantageous for investors, one might wonder if it’s here to stay.

Shiba Inu gains momentum

Recently, the world’s second-largest meme coin has left investors astonished by its impressive double-digit increase in value.

SHIB’s price experienced a substantial increase of approximately 18% within the past 24 hours, causing its worth to reach roughly $0.0000309. This significant jump also elevated its total market capitalization above $18 billion. As a result, SHIB now ranks among the top 10 cryptocurrencies in terms of market value.

Nevertheless, clouds of difficulty began to gather. Despite the token’s price surging by a large margin, its trading activity dropped significantly.

When trading activity decreases while prices are rising, it suggests that a potential change from a downtrend (bearish) to an uptrend (bullish) might be likely.

In simpler terms, the positive sentiment associated with it has decreased over the past few days, indicating an increase in negative (bearish) opinions. However, there’s been a significant surge in social activity around it, which could potentially fuel a continued upward trend (bull rally).

Is a price correction inevitable?

According to Coinglass’ findings, Shiba Inu’s Open Interest experienced a significant increase. Typically, an escalation in Open Interest implies the current price trend persisting, but in this case, it was not the usual scenario.

Based on historical trends of Shiba Inu’s open interest (OI), it’s noticeable that when the meme coin’s OI reaches its present level, it often experiences a price adjustment or correction. If past patterns recur, SHIB could potentially face another downturn soon.

It was discovered that another issue arose when we examined the Fear and Greed Index of the token. At that moment, the market was exhibiting “extreme greed,” which might have been a warning to sell. Additionally, technical indicators seemed to suggest a similar trend.

For example, the Relative Strength Index (RSI) has reached an overbought state, potentially indicating a coming sell-off. On the other hand, the Chaikin Money Flow (CMF) has shown a decrease — suggesting that some investors may already be selling SHIB.

Nonetheless, there were still chances of bulls pushing the memecoin’s value upward.

Even though Shiba Inu’s price surges have occurred recently, its Network-to-Value (NVR) ratio has stayed relatively low. A low NVR suggests that the asset might be underpriced, implying there’s still a chance for further price growth.

If such an occurrence takes place, Shiba Inu (SHIB) could potentially surpass a resistance level and head towards approximately 0.000032 USD. Conversely, should there be a correction, the meme coin may fall to around 0.000028 USD.

2024-12-01 19:03

Shiba Inu gains momentum

Is a price correction inevitable?

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