Shiba Inu’s looming breakdown: Can a Fed rate cut save SHIB from a September crash?
NOIDA (CoinChapter.com)— The Shiba Inu coin, or SHIB, has been facing tough times in the market, reflecting broader worries in the crypto world. However, the anticipated Federal Reserve rate cut could offer a much-needed boost.
The cut would increase the money flow in the market and lower the cost of holding riskier assets like cryptocurrencies. Hence, it might lead to a market-wide rally as investors look for better returns in a lower interest rate setting.
In such a scenario, traders might funnel their profits into SHIB, hoping to take advantage of its past volatility and meme-driven popularity. Memecoins like SHIB tend to react more strongly to big economic changes, so a rate cut could draw buyers back into the market.
Shiba Inu plans to launch a DAO.
Furthermore, SHIB’s upcoming DAO launch could be a bullish cue, since market participants might interpret the move positively. By giving holders a say in the project’s future, the DAO could renew interest and bring more people into the SHIB ecosystem.
Moreover, as SHIB faces challenges, these factors could help it recover or at least stabilize. Still, the big question is whether these positive signals are enough to influece buyers’ decision and can they outweigh the strong bearish sentiment in the market.
Revised Bearish Cues Subsection:
Despite the possible positive factors, Shiba Inu (SHIB) is still under a lot of pressure, with several signs pointing to more potential losses. One of the key indicators is the distribution among SHIB holders.
Shiba Inu supply distribution by balance of addresses. Source: Santiment
Data shows that larger investors, especially those holding between 100 million and 1 billion SHIB, have been selling off their positions. This trend suggests that big holders might be losing faith in SHIB’s short-term prospects and choosing to sell, which could add to the selling pressure.
Shiba Inu whale holdings and exchange holdings.
Making things worse is the sharp drop in SHIB supply held by whales, excluding exchanges. Usually, when SHIB leaves exchanges, it signals long-term holding, but the simultaneous decline in whale holdings tells a different story.
It hints that major players might be unloading their Shiba Inu coins, possibly expecting more price drops. Although there has been a slight recovery in whale holdings, it’s not enough to change the overall downward trend.
SHIB performance in Sept. over the years. Source: Tradingview
Adding to these worries is the SHIB USD pair’s poor track record in September. The token has consistently struggled during this month, and with September 2024 already looking shaky, traders might prepare for more losses.
Even with the Fed’s potential rate cut, the broader market’s macroeconomic environment presents risks. While a rate cut could boost demand, memecoins like SHIB, known for their sharp reactions to market movements, could see bigger swings, both up and down.
If the broader market turns bearish, SHIB could suffer more severe losses as investors quickly move away from riskier assets to safer options.
Technicals Also Bearish For the Shiba Inu Coin
Another bearish cue that could hurt the Shiba Inu coin traders is the SHIB USD pair forming a technical setup called the ‘descending triangle.‘
SHIBUSD pair formed a bearish setup with 67% downside target.
Analysts recognize the descending triangle as a bearish continuation pattern. The configuration features a declining upper trendline that compresses price action into lower highs, while a flat lower trendline serves as consistent but weakening support.
The pattern signals intensifying selling pressure, resulting in progressively weaker rallies that struggle to breach resistance.
In this setup, traders estimate the potential downside by measuring the maximum height of the triangle. Toncoin’s price recently broke out of this descending triangle, only for bulls to temporarily push it back within the pattern. However, if the Shiba Inu coin confirms the bearish setup, the SHIB/USD pair could plummet by over 67%, reaching a target near $0.0000046.
A breakout below the pattern in the current market climate could be catastrophic for the SHIB USD pair, with the trading pair potentially facing significant losses. If the SHIB coin’s price rally fails, bulls will likely attempt to consolidate above the key support level to mount a defense.
Still, the prevailing market sentiment indicates a challenging road ahead for any sustained rally.
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