Shiba Inu (SHIB), the popular meme coin, has seen a recent surge in price, gaining 12.77% over the past week. However, analysts warn that this uptrend might be short-lived due to several factors.
Profit Taking Threatens Upward Momentum
Market data analysis by AMBCrypto suggests a potential sell-off on the horizon. By examining exchange order books, they observed a higher volume of asks compared to bids, indicating that more holders are looking to sell their SHIB tokens than buy. This increased sell pressure could lead to a price drop despite the recent gains.
Mean Coin Age Hints at Selling Activity
The Mean Coin Age (MCA) metric strengthens the possibility of a price correction. MCA represents the average age of all SHIB tokens on the blockchain. An increase in MCA signifies that older tokens are being moved, often a precursor to selling. AMBCrypto observed a rise in the 90-day MCA for SHIB, suggesting that holders might be cashing in on their profits.
Network Growth Lags Behind Price Rise
While the price of SHIB is rising, the growth of the Shiba Inu network seems stagnant. Network Growth, a metric that tracks new addresses joining the blockchain for the first time, has declined for SHIB. This indicates a lack of new user adoption, which could hinder long-term price sustainability.
Profitability Ratio Suggests Short-Term Volatility
The MVRV Ratio, which gauges the average profitability of SHIB holders, has also been on the rise. While this might seem positive initially, a high MVRV can also indicate a price correction is likely as profitable holders take their gains off the table. However, the current MVRV remains negative, suggesting SHIB might still be undervalued in the long run.
Conclusion
The recent price increase for Shiba Inu might be facing headwinds in the short term. Profit taking, increased selling activity, and sluggish network growth could lead to a price drop. However, the potentially undervalued status of SHIB suggests the possibility of a rebound in the mid-term, depending on market conditions and future developments within the Shiba Inu ecosystem.
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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