Despite Recent Weakness, On-Chain Data Hints Shiba Inu (SHIB) Could Be Poised for a Massive Rally

SHIB has fared better than Dogecoin (DOGE), which has seen a steeper drop of 27% over the same period. The downturn aligns with a broader cryptocurrency market correction, led by Bitcoin's fall below the $78,000 mark.

Shiba Inu (SHIB) has been battered in recent weeks as its price dropped more than 15% in the past seven days.

Despite this decline, SHIB has outperformed Dogecoin (DOGE), which saw a steeper fall of 27% over the same period. The downturn aligns with a broader cryptocurrency market correction, with Bitcoin falling below the $78,000 mark.

However, even before the latest market downturn, on-chain data signaled diminishing interest in SHIB. Crypto analyst Ali Martinez recently highlighted this trend tweeting, “Whale activity on the ShibaInu network has declined by 79% over the past three months.”

Despite the recent weakness, some analysts remain optimistic about SHIB’s potential. On Wednesday, analyst Javon Marks pointed to a bullish chart formation that suggests a massive rally could be on the horizon.

“SHIB (Shiba Inu) prices maintaining the structure of a large Inverse Head & Shoulder and with the $0.000081 target still in play, an over 402% run to reach it could come out of this.” He tweeted.

SHIB (Shiba Inu) prices maintaining the structure of a large Inverse Head & Shoulder and with the $0.000081 target still in play, an over 402% run to reach it could come out of this.

Those who entered at the neckline (around $0.000019) are now down over 33%

Chart: TradingView pic.twitter.com/mP9lG91776

— Javon Marks (@Javon_M) February 15, 2024

Meanwhile, other indicators point to signs of accumulation and a possible reversal for SHIB. The price is currently consolidating, with the Relative Strength Index (RSI) at 54.72, indicating neutral momentum. While buying pressure is present, it remains insufficient for a breakout. The Stochastic RSI at 54.72/57.76 has cooled off but could signal renewed buying if it turns upward. A move above 60 RSI may spark an uptrend, while a drop below 50 could signal further downside.

At the same time, the Moving Average Convergence Divergence (MACD) indicator is flattening from bearish territory, hinting at a possible shift in momentum.

Additionally, although trading volume has only increased by 13% in the past 24 hours to $312 million, it still signals ongoing accumulation.

Beyond price action, SHIB’s ecosystem continues to expand with key developments aimed at improving liquidity and user experience. Earlier this week, the Shiba Inu team introduced upgraded liquidity pools designed to enhance liquidity management. The update allows users to seamlessly migrate, import, or create liquidity pools, streamlining the process.

These advancements have generated significant interest in Shiba Inu, driving a surge in wallet addresses on its Ethereum Layer 2 network. Over the past week, the number of wallet addresses has skyrocketed by around 500%, jumping from approximately 9.4 million on February 17 to over 55.7 million as of February 24.

Another bullish factor for SHIB is its increasing token burn rate. On Thursday, the Shiba Inu burn rate spiked by over 1,300%, removing over 30 million SHIB tokens from circulation in just one day. Token burning helps reduce supply, making SHIB scarcer, which could positively impact its price in the long run.

At press time, SHIB was trading at $0.012, reflecting a 3.91% drop in the past 24 hours.