Will Shiba Inu (SHIB) Coin Price Rally Sustain Its Momentum in October 2024?

Shiba Inu (SHIB) Coin Experiences Significant Rally Amid Increased Burn Rate and Whale Activity

Shiba Inu (SHIB), often referred to as the "Dogecoin Killer," is witnessing a robust upward trend in its market performance. Recently, the cryptocurrency has experienced a remarkable increase in its burn rate and heightened activity among large investors, raising questions about the sustainability of this bullish momentum.

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Surge in Shiba Inu's Burn Rate Exceeds 7,000%

A noteworthy development for Shiba Inu is the dramatic surge in its burn rate, which has skyrocketed by an astonishing 7,168% in recent days. In two significant transactions, a total of 6.9 million SHIB tokens were burned, followed by an additional burn of 1 million tokens shortly thereafter.

Token burning is a method employed to permanently eliminate coins from circulation, thereby reducing the overall supply. This reduction in supply can create scarcity, theoretically driving up prices if demand remains steady or increases. However, while the surge in burn rate serves as a positive indicator, it does not guarantee an imminent price rally. A substantial price increase necessitates sustained or growing demand to offset the decreased supply.

Whale Activity on the Rise: Bullish Signal or Cause for Concern?

In conjunction with the rising burn rate, whale activity surrounding Shiba Inu has also surged. Recent data indicates a 171.5% increase in large transactions involving SHIB, defined as those exceeding $100,000. Additionally, Arkham Intelligence has reported that SHIB holdings in Robinhood’s wallet increased from 44 trillion tokens to 47.2 trillion tokens over recent months.

The accumulation of tokens by whales is often interpreted as a bullish signal, as these large holders typically possess greater market insight and tend to acquire assets when they anticipate future price growth. However, this phenomenon can present a double-edged sword; if whales are poised to sell, it could lead to increased selling pressure, potentially suppressing SHIB's price. The critical factor will be whether these whales are committed to long-term gains or gearing up for short-term profit-taking.

Declining Exchange Reserves Suggest Supply Crunch Ahead?

Another essential on-chain metric to monitor is Shiba Inu's exchange reserves, which denote the amount of SHIB held on centralized exchanges. Recent data reveals a consistent decline in SHIB's exchange reserves, indicating that more tokens are being withdrawn from exchanges and moved into private wallets. This trend likely signifies a long-term holding strategy among investors.

When exchange reserves diminish, the immediate supply of tokens available for trading decreases. This reduction can lead to price increases if demand remains stable or grows. Investors withdrawing tokens from exchanges is frequently viewed as a bullish indicator, as it lessens the likelihood of a rapid sell-off; tokens in private wallets are typically not as readily accessible for trading.

Retail Interest Appears to be Cooling

Despite the positive on-chain indicators, one area of concern is the decline in retail participation. The number of daily active addresses is decreasing, suggesting that fewer retail investors are currently engaging with SHIB. Retail traders were instrumental in driving Shiba Inu's meteoric rise in 2021, and their diminished involvement could hinder SHIB’s ability to sustain a rally in the short term.

Without robust retail demand, even substantial whale accumulation may not suffice to catalyze a prolonged price rally. Observing whether retail interest rebounds in the coming weeks will be crucial.

Shibarium's Progress and Increasing Transactions

A significant development for Shiba Inu is the progress of Shibarium, the project's Layer-2 blockchain solution. Data from Shibariumscan indicates that daily transactions on the Shibarium network have surged from 3,960 to 7,530 in a single day. Additionally, there has been an increase in the number of new smart contracts deployed on the Shibarium platform.

Technical Indicators Bolstering SHIB's Rally

As of now, Shiba Inu's price has risen nearly 1%, currently trading at $0.00001502, supported by key technical factors. The token is trading above its Exponential Moving Averages (EMAs), signaling a bullish trend in both the short and medium terms. The 20-day EMA, currently at $0.00001484, serves as immediate support, further reinforcing the upward trajectory.

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The Relative Strength Index (RSI) stands at 61.41, indicating that SHIB is nearing overbought territory. However, since the RSI remains below 70, it suggests that while SHIB is gaining momentum, there is still potential for further upside before a potential market correction occurs.

Source: coinchapter

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Writer @Barland

Barland is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.

 

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