Is Shiba Inu (SHIB) Approaching a Critical Supply-Driven Rebound?

The Shiba Inu (SHIB) ecosystem has entered a pivotal phase in late 2025 and early 2026, marked by dramatic on-chain liquidity contraction and aggressive whale accumulation. These dynamics suggest a potential inflection point for the token, as structural shifts in supply distribution and institutional positioning collide with evolving market sentiment.

On-Chain Liquidity Contraction: A Supply Crunch Emerges

SHIB's on-chain liquidity has undergone a seismic shift, with approximately 80 trillion tokens withdrawn from centralized exchanges between late 2025 and early 2026. This outflow, concentrated at the $0.0000085 price level, reflects strategic accumulation by sophisticated investors seeking to capitalize on undervaluation. The withdrawal of such a massive volume has effectively tightened the available trading supply, reducing exchange reserves from 370.3 trillion SHIB in early December 2025 to 290.3 trillion by mid-January 2026-an 18–22% decline.

This liquidity contraction is not merely a short-term anomaly. Data from CryptoQuant reveals a sustained reduction in on-exchange supply, dropping from 88 trillion to 81 trillion SHIB between June and December 2025. While reserves briefly stabilized at 82 trillion post-December 5, 2025, the broader trend underscores a shift toward long-term holding behavior. The structural vulnerability of SHIB is further highlighted by the disparity between its $716 million mark-to-market value on exchanges and usable liquidity of only $100–200 million, driven by thin order books and slippage risks.

Whale Accumulation: Institutional Interest and Supply Consolidation

Whale activity has intensified, with large holders seizing the opportunity to consolidate control. The top 100 wallets increased their holdings by 15.11%, now commanding 57% of the total SHIB supply according to MEXC data. This concentration is amplified by a 428% surge in whale accumulation during early January 2026, as reported by Santiment. Such activity aligns with broader capital rotation into high-volatility assets, particularly within the meme coin segment.

A notable catalyst was a 200.6 billion SHIB outflow in September 2025, as tracked by Binance on-chain data. This single event underscored the dynamic nature of SHIB's liquidity and the influence of whale-driven movements. Meanwhile, fresh wallets withdrew 82 trillion SHIB-28% of the net circulating supply- from platforms like Coinbase, signaling a strategic repositioning of assets toward cold storage or long-term hodling.

Market Sentiment and Technical Indicators: A Tale of Two Forces

Despite these bullish structural signals, SHIB's price action remains range-bound, trading between $0.0000083 and $0.0000089 in late 2025 and early 2026. This stagnation reflects market indecision, compounded by a 62% decline in on-chain profitability for SHIB holders during the week of January 2026, attributed to a 9.6% price correction. The drop, attributed to a 9.6% price correction, has raised concerns about increased selling pressure and volatility.

However, technical indicators hint at a potential breakout. SHIB has formed a falling wedge pattern, with the RSI signaling a golden cross formation according to MEXC analysis. Analysts project a 280% rally to $0.000033 if the price breaks above the wedge's upper trendline, as projected by Watcher Guru. This scenario hinges on sustained supply tightening, stronger demand, and a surge in trading volume.

Risks and Structural Vulnerabilities

While the data paints a cautiously optimistic picture, critical risks persist. SHIB's low volume support and structural liquidity gaps leave it vulnerable to sudden outflows or bearish sentiment shifts. Additionally, the token remains below mid- and long-term EMAs, suggesting that a bullish breakout would require more than just whale accumulation-it would need broader market validation.

Conclusion: A Rebound on the Horizon?

SHIB's trajectory in late 2025 and early 2026 is defined by a tug-of-war between supply-side strength and market fragility. The combination of liquidity contraction, whale accumulation, and technical indicators points to a high-probability scenario for a supply-driven rebound. However, this outcome is contingent on overcoming structural vulnerabilities and attracting sustained demand. For investors, the key will be monitoring exchange reserve trends, whale activity, and volume expansion-signals that could either confirm a breakout or expose further volatility.