The Shiba Inu (SHIB) team has relaunched the Shibarium L2 network in private mode after the initial launch was plagued with technical issues. SHIB price remained stable at $0.0000008, but on-chain indicators suggest that the bulls could move in at any time.
Shiba Inu launched its layer-2 scaling solution, Shibarium mainnet, on August 16 after months of testing with millions of transactions. However, it was quickly discontinued after a series of technical problems. It is estimated that Shiba Inu owners have been keeping their tokens to themselves since Shibarium's initial launch, out of fear of security vulnerabilities in the network.
There was a decrease in market supply after Shibarium!
Despite the assurance of a two million dollar insurance plan, Shiba Inu deposits into crypto exchange wallets have now fallen to the lowest level in over a year. Data from Cryptoquant shows that Shiba Inu Exchange Reserves entered its ongoing decline on August 17, immediately after the Shibarium mainnet launch on August 16. When the data is enlarged, it is seen that SHIB Exchange Deposits have not fallen this much since February 2022.
Exchange Reserves track real-time changes in the total SHIB balances held by investors in well-known crypto exchange wallets. The chart above shows that the recent Shiba Inu price uptrends on August 5th and August 12th preceded significant declines in Exchange Reserves.
Between August 17 and August 26, Shiba Inu holders withdrew 1.8 trillion SHIB tokens worth $14.5 million at the current market price of $0.000008. That's more than 10 percent of Shiba Inu's average trading volume last week.
This highlights that another potential supply squeeze following the successful relaunch of Shibarium could be a game changer for the SHIB price if Shibarium FUD subsides and market demand increases.
SHIB market demand remains largely neutral
Possibly fearful of recent network vulnerabilities related to Shibarium, many Shiba Inu network participants have refrained from performing transaction activities in recent weeks. The chart below shows that daily Active Addresses on the Shiba Inu network have decreased since August 16. As of August 26, it decreased to 3,647, a 56 percent decrease compared to the 8,214 Active Addresses recorded on August 16.
Active addresses estimate the daily number of participants conducting economic transactions on a blockchain network. This means that the number of investors using SHIB for transactions has dropped significantly. Unsurprisingly, SHIB price has remained neutral in the $0.0000008 range for the past few days.
As a result, SHIB price action will depend significantly on users returning to the network in the coming days. The correlation between the Shibarium debacle and the decline in market demand points to how a successful relaunch of Shibarium could be a game changer for the SHIB price.
Shiba Inu price prediction: Potential breakout towards $0.000014
The on-chain data points analyzed above suggest that Shiba Inu price will likely retest $0.000014 once market demand returns. In/Out of Money Around Price (IOMAP) data, which shows the entry price distribution of current Shiba Inu owners, also confirms this prediction.
The chart below shows that 370,440 holders purchased 272.9 trillion SHIBs at an average price of $0.000011. If they sell early, it could cause a momentary pullback. However, if market demand increases as predicted, the bulls could immediately push the rally towards $0.000014.
Conversely, if Shibarium FUD continues after the relaunch, bearish traders could force a retracement below $0.000006. However, 133,510 owners had purchased 41 trillion SHIBs at an average price of $0.000006. If they hold firm, they could trigger a recovery. However, if this support fails to hold, SHIB price may decline further towards $0.000006.