At $0.000007, Shiba Inu (SHIB) is currently trading with a 3% gain this week. This article delves into the implications of key on-chain indicators for Shiba Inu’s price performance, particularly in the context of Bitcoin’s growing market dominance.
Shiba Inu’s recent 3% price increase appears modest when compared to the impressive gains of other major cryptocurrencies such as Bitcoin (BTC) and Solana (SOL). This raises questions about the future of SHIB, which is the second-largest memecoin by market capitalization.
One notable concern is the persistent high supply of SHIB on cryptocurrency exchanges, despite the broader crypto market’s recovery. Global interest in meme coins has dwindled in recent months, with Bitcoin gaining ground as investors become more risk-averse due to geopolitical instability. This trend might further reduce interest in memecoins like SHIB, potentially leaving them on the sidelines in the current market rally.
Data from CryptoQuant indicates that Shiba Inu holders seem poised for profit-taking. Over the past three weeks, over 1 trillion SHIB tokens have been moved to cryptocurrency exchanges, saturating the SHIB market supply. On October 17, Shiba Inu Exchange Reserves hit a 60-day peak of 170 trillion SHIB before slightly declining to 169.4 trillion by Friday.
A surge in Exchange Reserves often signals an oversupply of tokens in the market, implying that many holders may opt to sell their SHIB at favorable prices instead of waiting for a long-term price rally.
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Another concerning on-chain indicator is the lack of improvement in SHIB’s network traction. Despite the recent price increase, Shiba Inu has not seen a significant uptick in network activity this week. In fact, daily transactions have declined. The Transaction Count on October 18 was the lowest since May 2023, suggesting that SHIB’s price bounce may be more attributed to riding the broader market’s wave than to organic growth in its own network activity.
A decline in transaction count is typically a bearish indicator, indicating reduced network demand. Without a notable increase in network demand, the market’s appetite for SHIB tokens may weaken, potentially leading to a bearish price reversal.
Based on these on-chain data trends, it seems unlikely that Shiba Inu will gain sufficient momentum to surpass the $0.000008 resistance. The Global In/Out of the Money (GIOM) chart supports this prediction, showing that a significant number of addresses purchased SHIB at a minimum price of $0.000008.
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While it’s possible for SHIB to benefit from the broader crypto market’s bullish trend, it’s important to note that the weak network demand and high exchange supply may lead to early profit-taking and trigger a bearish reversal.
Bulls could push SHIB’s price closer to $0.000010 if they continue to ride the broader market’s bullish momentum. Conversely, if the price drops below $0.000005, it may lead to a downswing. However, support at this level may provide an opportunity for SHIB’s price to rebound to the $0.000007 range.
