Shiba Inu (SHIB)'s Death Cross and Burn Rate Dilemma: A Bearish Outlook for Near-Term Traders

In the volatile world of cryptocurrency, technical and on-chain signals often serve as early warning systems for market shifts. Shiba Inu (SHIB), the meme coin that once captured the imagination of retail investors, now faces a critical juncture. As of August 20, 2025, SHIB has confirmed a Death Cross—a bearish technical pattern—and its deflationary burn rate has plummeted to near-irrelevance. For risk-aware traders, these developments signal a high-probability continuation of downward momentum in the near term.

The Death Cross: A Technical Bear Flag

A Death Cross occurs when a short-term moving average (e.g., 50-day or 9-day) crosses below a long-term moving average (e.g., 200-day or 26-day). For SHIB, this pattern has materialized across multiple timeframes. On the daily chart, the 50-day SMA ($0.00001260) has fallen below the 200-day SMA ($0.00001450), while on the three-hour chart, the 9-day MA has similarly dipped below the 26-day MA. These crossovers are not mere coincidences; they reflect a structural shift in market sentiment.

The implications are clear: short-term buyers have lost control to long-term sellers. This is corroborated by the Relative Strength Index (RSI), which has fallen to 45.04, indicating weakening bullish momentum, and the MACD, which has crossed below its signal line, reinforcing the bearish bias. Traders should also note the 57% dominance of short positions in derivative markets, a stark indicator of institutional and retail pessimism.

The Burn Rate Dilemma: Deflationary Pressure Collapses

SHIB's on-chain dynamics further amplify the bearish case. The token's deflationary mechanism, which relies on burning a portion of its supply, has collapsed. In the last 24 hours, the burn rate dropped by 98%, with only 223,914 tokens burned—a far cry from the 1,000% surge in burn activity seen earlier in the year. This sharp decline in deflationary pressure increases the circulating supply, exacerbating selling pressure and eroding investor confidence.

The inconsistency in burn activity is particularly concerning. While a robust burn rate can create scarcity and drive price appreciation, the current trajectory suggests a lack of coordination within the SHIB ecosystem. Traders should monitor whether the community or project developers can reignite the burn mechanism, but for now, the absence of deflationary tailwinds leaves SHIB vulnerable to further declines.

Key Levels and Risk Management for Traders

For near-term traders, the immediate focus should be on support and resistance levels. The 50-day SMA ($0.00001260) acts as a critical resistance, and a close below this level would confirm the Death Cross. The next key support is at $0.00001165, where a potential retest could occur. However, given the weak on-chain fundamentals, a breakdown below $0.00001165 would likely accelerate the downtrend.

Risk-aware positioning demands strict stop-loss orders and position sizing. For example, a trader might consider a short position with a stop-loss above the 50-day SMA or a long position only if SHIB breaks above $0.000014 with strong volume. Hedging strategies, such as buying put options, could also mitigate downside risk in a volatile environment.

Conclusion: A Bearish Outlook for the Near Term

The convergence of technical and on-chain signals paints a bleak picture for SHIB in the near term. The Death Cross, declining RSI, and collapsing burn rate all point to a continuation of the downtrend. While crypto markets are inherently unpredictable, the current data suggests that SHIB is in a high-risk phase. Traders should prioritize risk management, avoid overexposure, and remain vigilant for any catalysts—such as a resurgence in burn activity or a coordinated buy-in—that could reverse the bearish momentum.

For now, the message is clear: SHIB's bear flag is flying, and the path of least resistance is downward.