Shiba Inu Price Reversal Could Trigger $52M Short Squeeze as Resistance Nears

Sean Williams
shiba_inu

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Key Takeaways:

  • SHIB has dropped 10% in a week, with short sellers betting on further declines.
  • A rebound past $0.00001435 could trigger $52M in liquidations, sparking a buying frenzy.
  • Technical indicators suggest upward potential, but declining user activity signals caution.

Shiba Inu (SHIB) has entered a volatile stretch after shedding nearly 10% of its value over the past week. Currently trading at $0.00001407, the token is testing key resistance as traders brace for either a dramatic rebound or continued decline. But with more than $52 million in short positions exposed, any upward move could spark a massive wave of liquidations—and potentially a rapid price rally.

Short Sellers on Thin Ice as Price Nears Trigger Level

Shiba Inu’s drop has emboldened bearish traders, but the risk of a short squeeze is growing. If SHIB manages to climb just slightly and break past the $0.00001435 resistance level, automated liquidations could be triggered, forcing short sellers to buy back in at higher prices. This cascading effect could turn bearish pressure into a bullish breakout.

Market data suggests $52 million in short positions could be wiped out in such a scenario, potentially fueling a surge in demand. Historically, this type of squeeze has ignited significant price increases in the SHIB ecosystem.

On-Chain Metrics Flash Mixed Signals

Despite the looming potential for a short squeeze, some caution flags remain. According to on-chain data, the number of active SHIB addresses has plunged by 36% in the last 48 hours. This suggests waning user engagement and a possible lack of confidence in a near-term rebound.

However, technical indicators still offer some hope. The Chaikin Money Flow (CMF) has hit its highest point since December, and the Relative Strength Index (RSI) remains well below the overbought threshold. Both metrics imply there is room for bullish momentum—if buyers are willing to act.

Also Read: Shiba Inu Drops After $70M Whale Transfer

Price Path Hinges on Breaking Resistance

SHIB’s recent attempt to climb stalled at $0.00001587, before retreating to its Point of Control around $0.00001329. Now hovering below the critical $0.00001435 level, the token is at a crossroads. A successful break above this ceiling could pave the way for a move toward $0.000018—and possibly as high as $0.000026, according to analysts at MRC.

That scenario depends on sustained volume and positive sentiment, both of which have been fragile in recent sessions. Still, if liquidation-driven buying kicks in, the rally could come faster than expected.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses

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