Shiba Inu Price Rises 12% But Faces Bearish Outlook

Shiba Inu's price has seen a modest increase this week as investors return to the crypto market. However, several key indicators suggest that this rally may not be sustainable. Shiba Inu (SHIB) reached $0.000012 on Thursday, with its 24-hour volume surging to over $270 million. This rebound, however, lagged behind that of other top meme coins like Dogecoin (DOGE) and Pepe (PEPE).

One of the primary reasons for the potential short-lived nature of Shiba Inu’s rally is the lack of significant activity from whales. Many large holders have been selling their coins this year, indicating a lack of confidence in the coin's future performance. This selling pressure has contributed to Shiba Inu underperforming compared to other meme coins.

Additionally, Shiba Inu’s open interest in the futures market has been weak in recent months. On Thursday, July 10, open interest stood at just $179 million, significantly lower than that of other smaller meme coins like Pepe and Bonk. This low open interest suggests a lack of speculative interest in the coin, which could further limit its upward momentum.

The spot market volume for Shiba Inu also pales in comparison to other meme coins. The $270 million volume on Thursday was dwarfed by Dogecoin’s $2.4 billion, while Pepe, Bonk, and Pudgy Penguins each had over $1 billion in volume. This disparity in volume indicates that Shiba Inu may not have the same level of market interest as its competitors.

Furthermore, Shiba Inu’s ecosystem is struggling. Shibarium, a key component of the Shiba Inu ecosystem, holds a total value locked of just $2.3 million, and its transaction growth has been declining. Other tokens within the Shiba Inu ecosystem, such as BONE, TREAT, and LEASH, have also failed to gain traction, further weakening the overall ecosystem.

Technical analysis also points to a potential bearish outlook for Shiba Inu. The Average Directional Index has dropped to 18, indicating a lack of momentum in the rally. An ADX figure of 20 and below, especially when pointing downward, is typically a bearish sign. Additionally, Shiba Inu remains below the Supertrend indicator, suggesting that the recovery is still weak. The coin is also trading below the 50-day and 100-day moving averages, further supporting a bearish outlook.

The biggest risk for Shiba Inu is that the ongoing rally could be part of the handle section of the inverse cup-and-handle pattern. This pattern often leads to a strong bearish breakdown, which could push the coin below $0.000001 if it drops below the lower side of the inverse cup-and-handle. This bearish breakout could be confirmed in the near term, leading to further declines in the coin's price.

The broader cryptocurrency market is also showing signs of uncertainty. While some coins, such as Bitcoin and Ethereum, have seen record inflows into exchange-traded funds (ETFs), the overall market cap remains below its previous all-time high. This stagnation in the broader market could have implications for meme coins like Shiba Inu, which often rely on the momentum of larger cryptocurrencies to drive their own price movements.

Investors should be aware of the risks associated with meme coins and approach them with caution. The high volatility and lack of fundamental value make them unsuitable for long-term investment strategies. Instead, they are often seen as speculative assets with the potential for short-term gains. However, the recent rally in Shiba Inu's price could be short-lived, and investors should be prepared for the possibility of further declines.