Shiba Inu (SHIB), the popular meme coin, has caught the attention of traders again as it positions for a potential breakout. Following weeks of uncertainty, recent market developments have led to a revised price prediction, offering a glimmer of opportunity for SHIB holders. Let’s dive into the factors driving this prediction and explore the key signals that traders should monitor.
Shiba Inu Rebounds, Boosting Trader Confidence
Two weeks ago, SHIB was teetering at $0.000012, raising concerns of a potential market capitulation. However, the token has since rallied to $0.000014, propelled by a favorable decision from the Federal Open Market Committee (FOMC) to cut interest rates by 50 basis points. This move provided a boost to market sentiment, with SHIB benefitting from the broader crypto market’s response to the news.
At its previous low of $0.000012, Shiba Inu’s price-Daily Active Addresses (DAA) divergence was showing negative readings, a troubling sign for traders. The price-DAA divergence is a critical on-chain metric used to measure user engagement on the blockchain. A negative divergence typically signals low network activity, indicating that a price increase may not be sustainable due to a lack of support from user activity.
However, SHIB’s price-DAA divergence has recently shifted into positive territory, with a reading of 15.90%. This positive divergence suggests that the token’s recent uptrend is backed by increasing network activity, reinforcing the idea that SHIB’s rally is more than just a short-lived spike. With rising engagement, SHIB is now presenting an opportunity for traders looking to capitalize on a potential breakout.
Surge in Derivatives Volume Signals Market Shift
Another key factor fueling confidence in Shiba Inu’s price potential is the surge in derivatives volume. According to data from Coinglass, both the spot and derivatives markets for SHIB had shown limited activity in recent weeks. However, the tide has turned, with derivatives volume seeing a sharp increase, indicating renewed interest from traders.
One telling indicator of market sentiment is the Funding Rate, which reflects whether traders are taking long or short positions. A negative Funding Rate generally means traders are betting on price declines, but the recent shift to a positive Funding Rate shows that market participants are now anticipating price increases and backing this outlook with long positions. This flip in sentiment could signal the beginning of a more sustained rally for SHIB.
An analysis of Shiba Inu’s weekly chart by BeInCrypto reveals the formation of a falling wedge, a bullish technical pattern that often precedes a breakout. This pattern has been developing since SHIB’s yearly high in March when the price reached $0.000032.
A falling wedge is characterized by a series of lower peaks and troughs, signaling a potential reversal in the downtrend. Buyers are beginning to capitalize on sellers’ exhaustion, and if the current trend holds, SHIB could break through the resistance level at $0.000015 and aim for a 40% price increase, potentially reaching $0.000019 by late 2024.
Also Read: Shiba Inu Burn Rate Soars 14,000% – Could SHIB Rally 156% Amid Bullish Breakout?
Risks and Challenges Ahead
Despite the optimistic outlook, traders should remain cautious. If sellers manage to regain control, the bullish prediction could be invalidated, and SHIB may slip back to $0.000010. The next few weeks will be crucial in determining whether SHIB can sustain its momentum and achieve the predicted breakout.
Shiba Inu’s recent price movement and increased network activity present a compelling opportunity for traders. With rising derivatives volume and a potential bullish breakout on the horizon, SHIB could be poised for significant gains in the coming months. However, the market remains volatile, and traders should keep a close eye on key resistance levels and overall market sentiment before making any moves.
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.
About The Author
