- Shiba Inu experienced a significant correction within a falling wedge pattern.
- Data from Shiburn indicates that 40 million SHIB tokens were burned in the last 24 hours, resulting in a 3500% increase in the burn rate.
- The 20-day EMA slope acts as dynamic resistance, helping sellers maintain a sell-the-rallies strategy.
A detailed examination of Shiba Inu’s recent price movements and market dynamics.
Shiba Inu Faces Bearish Trends Amid Wedge Pattern
Shiba Inu’s price dropped by 4% to $0.00001342, coinciding with Bitcoin’s fall below the crucial $60,000 support level. This decline in Bitcoin triggered broader sell-offs across major altcoins, which heavily impacted the meme coin sector, known for its volatility. The resultant sell-off reversed SHIB from multi-month resistance levels, raising concerns over a possible larger correction.
Burn Rate Surge Fails to Stave Off Bearish Momentum
Despite the substantial 40 million SHIB token burn that led to a 3500% spike in the burn rate, the bearish momentum continues. This extensive burn typically would help stabilize prices or even incite a rally by reducing circulating supply. However, current market conditions seem to overshadow the burn’s effects, maintaining pressure on the price.
Significant Drop in Open Interest Reflects Market Sentiment
Data from Coinglass reveals that Shiba Inu’s Open Interest has significantly declined from $37 million to $23.2 million throughout August, a reduction of around 37%. This substantial decrease signals reduced market participation and possibly diminishing investor confidence, factors contributing to the ongoing price decline.
Technical Indicators Suggest Potential Reversal
Shiba Inu is trading below its daily Exponential Moving Average, indicating that the easiest path for the price is downward. However, the converging trendlines of the falling wedge pattern point to weakening bearish momentum. This setup could lead to an upward breakout, suggesting an initial sign of trend reversal.
RSI Bounce Indicates Demand Pressure
The Relative Strength Index (RSI) has bounced from the oversold territory to approximately 35%, underscoring demand pressure at these lower price levels. Should this continue, it could signal the beginning of a recovery phase for SHIB.
Conclusion
Although Shiba Inu is currently experiencing significant bearish pressure, several technical indicators suggest a possible trend reversal. Reduced market participation and a substantial token burn are among the factors to monitor closely. Investors should keep an eye on these developments, as the potential for an upside breakout remains on the horizon.
