Shiba Inu
Shiba Inu (SHIB) coin, the “Dogecoin Killer,” is currently experiencing a strong upward rally. Recently, it saw a surge in its burn rate and whale activity which further supported its bullish momentum but how long can this momentum last? Let’s Figure it out.
Shiba Inu’s Burn Rate Surges Over 7,000%
One of the most recent developments is Shiba Inu’s burn rate, which has surged by 7,168% over the past few days.
Shiba Inu burn rate surged over 7000%. Source: ShibBurn on X
In two notable transactions, 6.9 million SHIB tokens were burned, followed by another burn of 1 million tokens shortly after. Token burns are a mechanism that permanently removes coins from circulation, thereby reducing the overall supply.
A reduced supply can create scarcity, which, in theory, can drive up prices if demand remains constant or increases. However, while the burn rate surge is a positive indicator, it alone does not guarantee a price rally. For a substantial price increase to occur, there must also be steady or growing demand to balance the reduced supply.
Whale Activity Surges: Bullish or Bearish?
Alongside the burn rate, whale activity in Shiba Inu has also spiked. Data shows a 171.5% increase in large SHIB transactions (those over $100,000). Additionally, Arkham Intelligence reported that SHIB holdings in Robinhood’s wallet grew from 44 trillion tokens to 47.2 trillion tokens over a few months.
Robinhood’s wallet holds 47.2 trillion tokens. Source: Arkham Intelligence
Whales accumulating tokens is often seen as a bullish signal, as these large holders generally have better access to market insights.
They tend to accumulate when they expect future price growth. However, whale activity can also be a double-edged sword. If whales are preparing to sell, this could lead to increased selling pressure, potentially suppressing SHIB’s price. The key will be whether these whales are holding for long-term gains or preparing for short-term profit-taking.
Declining Exchange Reserves: Supply Crunch Ahead?
A crucial on-chain metric to consider is Shiba Inu’s exchange reserves, which refer to the amount of SHIB held on centralized exchanges. Recent data shows that SHIB’s exchange reserves have been steadily declining. This suggests that more tokens are being moved off exchanges and into private wallets, likely indicating a long-term holding strategy.
Shiba Inu exchange reserves are declining. Source: CryptoQuant
When exchange reserves drop, fewer tokens are available for trading. This reduces the immediate supply and potentially leads to price increases if demand remains steady or grows. Investors moving tokens off exchanges is often viewed as a bullish indicator because it reduces the likelihood of a quick sell-off, as tokens in private wallets are generally not as readily available for trading.
Retail Interest is Cooling
While on-chain indicators point to potential bullish sentiment, one area of concern is the drop in retail participation.
Shiba Inu Daily active addresses are declining. Source: Santiment
Daily active addresses are declining, indicating that fewer retail investors are engaged with SHIB at the moment. Retail traders were a critical driving force behind Shiba Inu’s meteoric rise in 2021, and their reduced participation could limit SHIB’s ability to rally in the short term.
Without strong retail demand, even large-scale whale accumulation may not be enough to drive a sustained price rally. It will be essential to watch whether retail interest picks up in the coming weeks.
One of the major developments for Shiba Inu is the progress being made with Shibarium, the project’s Layer-2 blockchain solution. Data from Shibariumscan shows that daily transactions on the Shibarium network surged from 3,960 to 7,530 in a single day. Additionally, the number of new smart contracts deployed on Shibarium has increased.
Strong Technical Indicators Fueling SHIB’s Rally
Shiba Inu’s coin price surged by nearly 1%, currently trading at $0.00001502, supported by key technical factors.
Shiba Inu Daily Price Chart. Source: TradingView
The token is trading above its EMAs (Exponential Moving Averages), signaling a bullish trend in both the short and medium terms. The EMA 20 at $0.00001484 is acting as immediate support, further bolstering the upward movement.
The RSI (Relative Strength Index) sits at 61.41, indicating that SHIB is approaching overbought conditions. Since the RSI is still below 70, it suggests that while SHIB is gaining momentum, there is still room for further upside before a potential correction might occur.
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