Shiba Inu’s price has broken out of a two-and-a-half-month-old downtrend line, but it faces bearish cues.
The memecoin craze is fading fast, with trading volumes falling to February lows.
The asset’s adoption rate is also at an eight-month low, indicating a lack of interest from potential investors.
The Shiba Inu (SHIB) price, despite breaking out of the downtrend, has not been putting on the most impressive performance.
Lack of support from investors is a concern, which could cause the memecoin to lose its rally.
Shiba Inu investors remain skeptical
Shiba Inu’s price action disappointed investors, causing SHIB holders to withdraw from participating in the network. This is evident in the trading volume.
Average daily trading volume fell from $169 million in April to $38 million in May. This is a 77% drop, which is mainly due to the waning of the memecoin craze, which led to a surge in tokens such as dogwifhat (WIF) and Pepe (PEPE).
Shiba Inu trading volume. Source: IntoTheBlock
Furthermore, the lack of optimism observed among investors also extends to those who have yet to join the network. This is visible in the adoption rate, which is currently at an eight-month low.
The adoption rate measures the rate at which new addresses are formed on the network. This assesses whether a project is losing or gaining traction in the market. In the case of SHIB, this adoption rate is 29%, indicating that only 29% of all active addresses are new investors.
Shiba Inu adoption rate. Source: IntoTheBlock
While this isn’t the worst, it’s also not the best, as Shiba Inu has seen higher levels of participation from new investors in the past.
SHIB Price Prediction: Possible Drop Awaits
Shiba Inu’s price changed at $0.00002393 after breaking out of a two-and-a-half-month downtrend. The memecoin is currently consolidating between $0.00002584 and $0.00002267.
However, taking into account the above factors, a likely outcome is a break below $0.00002267. This would drop SHIB to $0.00002093 or lower and could wipe out half of the gains made during the late February to early March rally.
The Ichimoku Cloud also supports this result as it is above the candlesticks and shows bearish sentiment. The Ichimoku Cloud is a comprehensive indicator that defines support and resistance levels, identifies trend direction, measures momentum, and provides trading signals.
Shiba Inu price analysis. Source: TradingView
As a result, the price of the Shiba Inu may fall.
On the other hand, if Memecoin can sustain the breakout, it could break above the $0.00002584 resistance level. This would push SHIB to $0.00002835, which turning into support would invalidate the bearish thesis, driving Memecoin further up.
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