Traders Facing Losses May Impact Shiba Inu’s Downtrend Amid Declining Wallet Profitability

• Shiba Inu (SHIB) is currently facing significant selling pressure, with a notable decline in wallet profitability impacting investor sentiment.

• The recent plunge in the percentage of profitable wallets for SHIB indicates a broader market concern, which could continue to influence trader behavior.

• According to IntoTheBlock, “Going by past trends, SHIB’s price rally coincides with a rise in the number of profitable wallets,” highlighting the importance of wallet performance in price trajectory.

Shiba Inu’s profitability is shrinking, affecting market sentiment and price stability as only 47% of wallets remain in profit, signaling potential further declines.

Wallets in profit hit a 3-month low

The number of profitable Shiba Inu wallets has dropped to 676,500 addresses, marking the lowest level in three months. Currently, only 47% of SHIB holders are profitable, while 49% are experiencing losses. This shift has significant implications for market sentiment as it indicates a potential increase in sell-side pressure as traders seek to minimize their losses.

Source: IntoTheBlock

Historically, price increases for SHIB have correlated with a rising number of profitable wallets. If the trend continues, it may lead to more downward pressure on prices as traders react to their losses by offloading their assets.

Is a declining MVRV good for price?

Shiba Inu’s Market Value to Realized Value (MVRV) ratio has recently dropped to 0.907, the lowest value since early November 2024. This downtrend indicates that the average holder is witnessing reduced profits from their investments, highlighting a concerning trend for future pricing momentum.

Source: IntoTheBlock

While a low MVRV ratio might suggest decreased selling pressure—with fewer incentives to liquidate positions—demand from buyers must remain robust to prevent further declines in SHIB’s price. A lack of buyer interest could exacerbate losses, sustaining the bearish outlook.

SHIB price analysis

On the daily chart, Shiba Inu is experiencing increased selling pressure that is exceeding buying interest. The Relative Strength Index (RSI) has dropped to 36, indicating a prevailing bearish momentum. A shallow RSI reading suggests that SHIB is nearing oversold territory, potentially setting the stage for a reversal if buying activity can gain traction.

As of the latest update, the RSI is showing signs of recovery, indicating a potential uptick in buying momentum. Should it surpass the signal line, it could reinforce bullish activity, prompting a shift in the current market dynamics.

(Source: Tradingview)

Moreover, the Average Directional Index (ADX) is on the rise, confirming that the current downtrend remains strong. Traders should closely monitor the ADX line for signs of a potential bullish reversal as SHIB attempts to challenge key resistance levels.

SHIB has recently tested resistance levels at the 0.786 Fibonacci level of $0.0000189. A successful breakthrough above this level may lead to further price appreciation, with the next key target set at $0.0000212.

Open Interest rises again

Recent data from Coinglass indicates a slight decline in Shiba Inu’s Open Interest (OI), which fell to $351 million. Following this dip, the current OI stands at $348 million, alongside a modest 5% increase in 24 hours, suggesting that traders are starting to open new positions.

If the OI continues to rise, it could indicate a resurgence of speculative interest, potentially supporting an uptrend for SHIB. Additionally, with a predominance of long positions evident from positive funding rates, a bullish market sentiment may begin to take root.

Conclusion

In conclusion, the current landscape for Shiba Inu is marked by reduced profitability among holders, influencing overall market sentiment negatively. As fewer wallets remain profitable, potential selling pressure increases, which could lead to additional price declines. However, analysts will be watching key technical indicators like the RSI and ADX which might signal a forthcoming trend reversal. Traders should remain vigilant and adjust their strategies based on these dynamics, especially as open interest levels indicate growing market participation.