Why Did Shiba Inu Price Drop After Its Memecoin Rally?

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This article was first published on The Bit Journal. Shiba Inu price came under pressure after one of the strongest rallies among major memecoins earlier this week. The token has fallen by nearly 11% in the last 24 hours after traders capped their profits after the asset’s explosive price rally sparked renewed speculation across the memecoin market.

Shiba Inu Price Tests Key Support 

The Shiba Inu price has recently surged back into a crucial technical zone that several traders are keen on closely monitoring. A zone of imbalances is expected between $0.0000042 and $0.00000485, where the buying momentum may return if bulls are still prevailing. These price spreads are frequently revisited in the correction as markets search for liquidity prior to defining the next direction.

However, the Shiba Inu price is still above its 20-day and 50-day exponential moving averages (EMAs) on the daily chart, despite the pullback. At present, these are higher, indicating that the overall trend is still not invalidated despite the sharp selling pressure in the near term.

SHIB Indicators Signal Short-Term Weakness 

The slowdown is also picked up by momentum indicators. The Stochastic RSI, which has been overbought since the rally above 80, has started to pullback, confirming that buying pressure is waning, and further market corrections are likely in the near future. The midpoint of the imbalance zone, around $0.00000456, could serve as an initial area where buyers attempt to stabilize the Shiba Inu price.

On-chain data also points to a number of other complications. One of the factors that used to help support the token has been its burn rate, which has fallen significantly over the past 24 hours for SHIB.

Shiba Inu Price Awaits Bullish Recovery 

Meanwhile, heavy liquidations were seen in the derivatives market during the sell-off. Leveraged traders were busy unwinding their long positions, wiping out over $2.1 million in long positions, after a recent bull run.

The correction has tempered short-term momentum, but market participants are still not seeing it as a market change. With support holders holding the current support level, the Shiba Inu price may find stability and a return to the higher price level once selling pressure eases.

Conclusion 

The current sessions will be key to deciding whether the Shiba Inu price continues its bull run or extends its pullback. Resisting the key support level could regain buyers’ interest, and a clear move below the key support level could trigger further selling before a new sustained trend is formed.

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Summary

• Shiba Inu price dropped 11%, testing a key support zone after a strong rally.
• SHIB remains above its 20-day and 50-day EMAs, despite fading momentum.
• Falling token burns and $2.1 million in liquidations increased selling pressure.

Glossary of Key Terms

Support Zone: A price level where buying may increase.

Imbalance Zone: A price gap often revisited by markets.

EMA: A trend indicator based on recent prices.

Token Burn: Permanent removal of tokens from circulation.

Derivatives Market: Trading of contracts tied to crypto prices.

Long Liquidation: Forced closure of leveraged buy positions.

Frequently Asked Questions about Shiba Inu Price

1. Why did the Shiba Inu price drop?

Profit-taking and long liquidations triggered the 11% decline.

2. What is SHIB’s key support zone?

The main support lies between $0.0000042 and $0.00000485.

3. Why does the token burn rate matter?

A lower burn rate reduces supply pressure, which can weaken bullish momentum.

Reference

Ambcrypto

Disclaimer

The article is purely informational and it is not a financial, investment, or a trading advice. Cryptocurrencies are extremely risky and volatile. Before investing, the readers are to conduct personal research and seek the advice of a qualified financial expert.