SHIB supply on exchanges has dropped to record lows, potentially creating a supply squeeze
Open interest has increased 43% in two weeks to $135M, indicating growing trader conviction
Technical indicators show positive signals with SMA approaching bullish crossover and RSI moving toward overbought territory
The second-largest memecoin by market cap, Shiba Inu (SHIB), is showing signs of a potential breakout despite recent price struggles. Currently trading at $0.00001235, SHIB has experienced a 41.34% decline this year and sits 86.13% below its all-time high of $0.00008845.
While other popular memecoins like Dogecoin, Pepe, Trump coin, and Bonk have posted gains, SHIB recorded a slight drop of about 2% in a 24-hour period.
The Ethereum-based token currently has a market cap of $7.32 billion with a circulating supply of 589.25 trillion tokens. Its trading volume reached $156.42 million, representing a 43.36% increase and about 2.14% of its total market cap.
Technical Indicators Point to Possible Uptrend
Technical analysis of SHIB’s price chart reveals some promising signals for bulls. The Simple Moving Average (SMA) is approaching a positive crossover on the daily timeframe, suggesting increasing bullish momentum for the second-largest memecoin.
The Relative Strength Index (RSI) has broken above the neutral point and continues to move toward the overbought range. These technical indicators suggest SHIB may continue its upward trend in the near term.
If market conditions favor bulls, SHIB price could break through its resistance trendline and head toward the $0.0000150 mark. With stronger positive sentiment, the token might even test the $0.000020 level.
Popular crypto analyst CryptoELITES has identified that Shiba Inu is currently sitting in what they call a “strong buy zone.” The analyst forecasts a potential rally of between 14x and 17x from current prices.
If such a prediction were to materialize, SHIB could surge to between $0.00018 and $0.00021. However, this bullish outlook depends on SHIB maintaining support at the lower descending trendline.
The rally would be confirmed if SHIB can flip resistance at the 0.618 Fibonacci level of $0.00003. Success at this level could set the stage for a move past $0.000085, potentially putting the token on a path to eliminate a zero from its price.
Supply and Demand Dynamics
Data from analytics platform Santiment shows that the amount of SHIB supply on exchanges has fallen to record lows. This decreasing supply combined with any surge in demand could create a supply squeeze, adding pressure for prices to move higher.
The reduced exchange supply supports the bullish price prediction and increases the possibility of a strong rally.
Open interest in SHIB futures has risen by 43% over the past two weeks, reaching $135 million from around $94 million. This increase indicates that futures traders are opening new positions, showing optimism about SHIB’s future price movement.
When open interest rises as it is now, it suggests traders believe a strong trend is about to emerge. This growing conviction among traders provides further support for a bullish outlook.
However, the increased leverage activity surrounding SHIB could also lead to higher volatility in the token’s price action.
The meme coin market as a whole has been tracking Bitcoin’s recent movements, with the total meme coin market cap increasing to $50 billion after gaining 3%. Bitcoin recently surged to $88,000 for the first time in three weeks.
For SHIB’s potential rally to materialize, the token needs to attract strong buying demand at current levels. If this demand materializes while supply remains constrained, Shiba Inu could break out from its current consolidation range and begin moving toward the ambitious targets set by analysts.
The coming weeks will be crucial in determining whether SHIB can maintain support and begin its climb toward higher price levels that many in the community are hoping to see.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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