SHIB Set to Explode? On-Chain Data Tells a Different Story!
In recent weeks, Shiba Inu (SHIB) has experienced a period of relative price consolidation, with intermittent spikes driven by renewed interest from retail traders. While SHIB saw a notable surge in volatility towards the end of September, its overall price movement has remained largely range-bound, mirroring broader market indecisiveness.
However, underlying on-chain and derivatives data may signal potential future trends for the token.
Bullish Cues from Derivatives Markets vs. On-Chain Whale Movements
The charts present mixed signals for SHIB’s near-term outlook, particularly when contrasting the insights from the derivatives and on-chain data. On the bullish side, the Open Interest (OI) chart indicates a steady rise in SHIB futures activity, a typical sign of increasing speculative interest.
Shiba Inu futures open interest. Source: Coinglass
Rising OI generally suggests that more participants are entering the market, either in anticipation of a price move or to hedge existing positions. This trend can lead to heightened volatility, which, combined with a rising price, often signals an upcoming bullish breakout.
Shiba inu OI-weighted funding rate.
Moreover, the positive funding rate shown in the OI-weighted funding rate chart further supports this outlook. A positive funding rate suggests that traders holding long positions are willing to pay a premium to maintain their exposure, hinting at bullish sentiment in the futures market.
Persistent positive funding rates can reflect underlying confidence in SHIB’s price appreciation potential, as traders expect upward momentum to continue.
Shiba Inu supply distribution by balance of addresses. Source: Santiment
However, contrary to this bullish derivative sentiment, the on-chain data reflects declining whale holdings. The decline in SHIB accumulation by large holders, particularly those with wallets holding between 1 million and 100 million coins, indicates that some investors may be offloading positions, potentially taking profits.
Historically, whale distribution can precede price pullbacks, as large investors are often seen as key drivers of market trends. This decline in holdings could temper the optimism in derivatives markets, signaling a need for caution among SHIB investors.
SHIB Price Could Be Looking At A Bullish Breakout
Meanwhile, the SHIB USD pair might be poised for a bullish breakout from a theoretically neutral technical setup, the ‘symmetrical triangle pattern.‘
Traders generally regard symmetrical triangles as neutral patterns that can break out in either direction. They often wait for a decisive breakout above or below the triangle’s boundaries with increased volume to confirm the pattern’s resolution.
SHIB USD pair has formed a neutral technical setup. Source: Tradingview
The two trend lines converge in the triangle’s apex, and breakouts tend to occur before the price action reaches this point. As the price action narrows, the volume trend should decrease, which often happens as the market consolidates within the pattern.
Traders typically expect a significant increase in volume to validate the breakout. The symmetrical triangle is notorious for its impartiality, breaking upward or downward with a capriciousness that defines the essence of trading crypto assets.
According to technical analysis, SHIB price is primed for a nearly 272% rally to the pattern’s theoretical price target of nearly $0.000067. However, if the bullish breakout fails, the bearish aspect of the pattern could take over, resulting in the SHIB USD pair dropping 80% to $0.0000037.
Additionally, the token faces challenges, including its high supply, which could limit price increases despite burn efforts.
The post Shiba Inu (SHIB) Set to Explode? On-Chain Data Tells a Different Story! appeared first on CoinChapter.
