by Enoch Mwathwa
Shiba Inu price has continued to be suppressed in the market over the past weekend as bearish technicals reigned over despite a massive surge in the burn rate of the token. Shiba Inu was also trading at $0.000013, marking an 18 percent decline from the July 2021 peak and a 27 percent fall against the year-to-date high. The indications at the market have become downside pointing unless and until the momentum could shift to be on the key resistances.
Shiba Inu Price Pattern Signals Bearish Breakdown
On technical analysis, Shiba Inu slipped underneath 50-day and 100-day Exponential Moving Averages (EMAs). On the charts, this would be regarded as a bearish development, in general, because it depicts poor short-term and medium-term momentum.
According to analysts, the token has created a head and shoulders pattern, which is one of the most popular bearish chart patterns in technical trading. Shiba Inu price stands at 0.00001760, and the shoulders are at a range of 0.000016. The neckline is located at $0.00001027, and a breakdown below this level may confirm a larger bearish continuation.
If Shiba Inu falls below the neckline, traders anticipate a potential drop to $0.0000090. Nevertheless, analysts warn that the bearish sentiment might be incorrect in the short term in case the coin breaks the $0.000015 resistance point. These levels are typically used by technical traders in assets that are highly volatile by nature to determine entry and mixing points.
Shiba Inu Burn Rate Jumps, Yet Price Remains Weak
On-chain data from ShibBurn reported a 1,550% increase in the token burn rate on August 16, with 3.77 million SHIB removed from circulation. One wallet accounted for nearly 3.5 million tokens sent to inaccessible addresses, contributing heavily to the total.
Shiba Inu is designed as a deflationary meme token, with supply reductions intended to support price growth over time. From its initial supply of 999.9 billion in 2021, the circulating supply has now decreased to about 584 billion tokens. Despite this deflationary scheme, recent burns did not suffice to shift the pressure in the market.
When information provided by Nansen is considered, the trader holdings declined by 61.7 billion to 70 billion in the previous month, indicating a lower level of retail interest. The investors of Whale also seem less active as their stocks of 45billion SHIB have remained the same since early July, indicating little accumulation on behalf of Whale investors during this market cycle.
Declining Investor Interest and Shibarium Weakness Add Pressure
The derivatives account activity has decreased, and Shiba Inu futures open interest has fallen to $173 million. This is a dramatic reduction compared to the $328 million as measured on July 22, indicating less demand for leveraged exposure. Analysts perceive these declines as a bearish indicator because they indicate less activity on the market by both the speculative and institutional investors.
Moreover, the ecosystem of Shiba Inu has also been rather weak with its Layer-2 blockchain solution Shibarium. The amount of value locked in Shibarium has retracted to the level of $1.69 million, which questions the further development of the ecosystem and sustained adoption. In the past, the enhanced adoption of Shibarium has caused the sentiment amongst investors to improve as it enhances the utility of tokens and increases the rate at which tokens are burnt.
According to the specialists, the Shiba Inu is confronted with two problems: despite the ongoing supplies shrinking by means of being burned, demand among retail traders and large holders is weak. Technical indicators proposed that the bearish breakdown could gain momentum in the forthcoming weeks unless market interest picked up.
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