The price of Shiba Inu (SHIB) remains around $0.000024 on Wednesday after being rejected from the weekly resistance level earlier this week. On-chain data supports a bearish outlook as SHIB holders are taking profits from recent gains and increasing selling pressure, suggesting a further decline in the price of the memecoin.
SHIB shows signs of weakness
The price of Shiba Inu faced resistance at the weekly level of $0.000028 on Sunday and fell by 6% until Tuesday. This weekly level coincides with the 50% price retracement (drawn from the March high of $0.000045 to the August low of $0.000010), making it a key resistance area. At the time of writing this article on Wednesday, SHIB is hovering around $0.000024.
If SHIB continues to fall and closes below the support level of $0.000022, it could extend the drop to retest its next weekly support at $0.000019.
The Relative Strength Index (RSI) indicator on the daily chart also fell from the overbought level of 70 on November 13 and is currently at 57, pointing downwards and indicating weakness in the momentum. If the RSI closes below the neutral value of 50 on a daily basis, it would suggest a sharp decline in the price of Shiba Inu.
Looking more closely at the on-chain metric of Shiba Inu, a bearish outlook is projected. Santiment's Network Profit/Loss (NPL) indicator calculates a daily Return on Investment (ROI) at the network level based on the on-chain transaction volume of the coin. In short, it is used to measure market pain. Strong spikes in a coin's NPL indicate that its holders are, on average, selling their portfolios at a significant profit. On the other hand, strong declines imply that the coin holders are, on average, realizing losses, suggesting panic selling and capitulation of investors.
In the case of SHIB, the metric surged almost 32 times from 1.61 million to 51.33 million from Sunday to Tuesday; a similar spike was seen recently on November 11, after which the memecoin fell by 16% in the following three days. If history repeats itself, prices could decline in the coming days.
The In/Out of the Money Around Price (IOMAP) from IntoTheBlock also supports the bearish outlook. Nearly 40,830 addresses accumulated 53.41 trillion SHIB tokens at an average price of $0.000025. These addresses bought the memecoin around the level of $0.000025, and if the price rises to this level, investors may sell their tokens to exit at breakeven, making this level a key resistance area.
From a technical analysis perspective, the level of $0.000028 approximately coincides with the findings of the IOMAP, making this area a key reversal level to watch.
Although the on-chain metrics and technical analysis support the bearish outlook, if the daily Japanese candlestick of SHIB closes above the weekly resistance level of $0.000028, the bearish thesis would be invalidated, leading to a price surge to retest its weekly high of late March at $0.000032.