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Shiba Inu (SHIB), the popular meme coin, has recently encountered a perplexing surge in activity that could potentially drag its price down further. Over the past week, the cryptocurrency has seen a significant decrease in value, dropping by 9.33%. This downturn has caught the attention of market watchers and Shiba Inu enthusiasts, sparking concerns over the future trajectory of SHIB’s price. The root cause of this downward trend appears to be a considerable increase in the coin’s 90-day dormant circulation. This metric, which tracks the movement of tokens that haven’t been transacted for an extended period, has spiked dramatically, indicating that long-term holders might be moving to cash out their holdings.
The implications of this surge in dormant circulation are significant. Historically, when long-term holders start to sell off their assets, it exerts a downward pressure on the cryptocurrency’s price. Observations from the past few weeks reveal a steep increase in dormant circulation, jumping from 47.46 billion to an astounding 211.78 billion. This shift suggests a bearish outlook for SHIB, as the market might struggle to absorb the additional selling pressure from these long-standing tokens entering circulation. A closer analysis of the token’s exchange inflow—which measures the volume of tokens moving from private wallets to exchanges—reveals an alarming spike, indicating a readiness among holders to sell.
This increased movement to exchanges is traditionally viewed as a bearish indicator, as it often precedes a sell-off. If the inflow remains high, it could signal that the market is not in a position to support these sales without experiencing a price drop. Currently, SHIB’s exchange inflow has hit levels not seen in over a month, pointing towards an intensified selling pressure. This situation is further compounded by the coin’s current position in relation to key Exponential Moving Averages (EMAs), which are critical indicators used by traders to gauge market trends. SHIB is trading below both the 20 and 50 EMAs, a clear sign of a bearish trend.
The technical analysis, combined with the on-chain data, paints a grim picture for Shiba Inu’s immediate price prospects. The coin’s struggle to stay above these EMAs could lead to further losses, with potential targets outlined by the Fibonacci Retraction tool indicating possible drops to lower support levels. However, if SHIB manages to break through the immediate resistance offered by the short-term EMAs, there’s a chance for recovery to higher price points. Despite this, the overwhelming sentiment remains cautious, as the increased selling pressure and bearish technical indicators suggest the likelihood of continued price declines for Shiba Inu in the near term.
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