As a seasoned researcher with over two decades of experience in the financial markets, I’ve seen countless instances where a rapid upward trend in an asset can be misleading. The recent surge of Shiba Inu (SHIB) has certainly caught my attention, but it also serves as a reminder that market trends are often driven by emotions rather than fundamentals.
TL;DR
- Shiba Inu (SHIB) surged 50% in two weeks, but indicators like high FOMO and an elevated RSI hint at a potential pullback.
The rally is possibly fueled by overall market momentum, Shibarium advancements, a spike in burn rate, and the expected launch of a Shiba Inu-related stablecoin.
Further Rally or Time for a Correction?
Right now, Shiba Inu (SHIB) is one of the standout performers in the crypto world, having experienced a significant 50% price surge over just a fortnight. At present, it’s trading approximately at $0.0000196, which marks a 10-week high. Moreover, its market capitalization surpassed $11.5 billion, placing it as the 14th largest cryptocurrency in circulation.
Although the general market conditions seem positive, certain crucial factors indicate that Shib’s value might start to decline in the near future. According to the crypto analytics platform Santiment, the level of FOMO (Fear of Missing Out) has risen to a “significant” extent, suggesting that we might be approaching a local peak.
The fear of missing out, or FOMO, refers to the emotional state experienced by investors who worry about not seizing a profitable opportunity, causing them to act impulsively and based on emotions. This sensation typically arises when prices are already rising, and is often fueled by hype generated on social media networks.
The excessive increase in the price of cryptocurrencies during periods of high fear of missing out (FOMO) is typically not sustainable because it’s primarily driven by emotions rather than underlying fundamentals. This situation may suggest that a decrease or correction could be coming soon.
Another factor suggesting that SHIB’s uptick might be interrupted soon is the asset’s rising Relative Strength Index (RSI). The technical analysis tool measures the change and speed of price movements. It varies from 0 to 100, with readings above 70 hinting that SHIB is overbought and potentially heading toward a correction. The RSI is currently set at a seven-month high of 90.
What’s Fueling the Rally?
The recovery in Shiba Inu’s price seems to coincide with the overall bullish trend in the cryptocurrency market. At present, Bitcoin (BTC) hovers around $66,000, while Ethereum (ETH) has breached the $2,650 mark.
As an analyst, I’d rephrase the sentence as follows: “Additional factors contributing to its valuation are the progress made on the layer-2 scaling solution Shibarium and the staggering increase of over 34,000% in the burn rate within the last 24 hours.
Last but not least, the resurgence could be linked to the recent announcement that the SHIB team is working toward launching a stablecoin called SHI. LUCIE (Shibarium’s Marketing Strategist) said the product will see the light of day once the infrastructure is “fully prepared, ensuring stability and utility within decentralized finance.”
They asserted that this digital currency, being a stablecoin, would offer price consistency, broader acceptance, improved functionality, integration with Decentralized Finance (DeFi), strengthening of the community, and numerous additional advantages.
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2024-09-27 14:32