Shiba Inu (SHIB), one of the most popular meme coins in the cryptocurrency market, has seen its price stuck in a narrow trading range, currently consolidating at $0.00001718 as of October 9. This marks a 21% decline from its peak earlier this month, putting the token in a local bear market. SHIB's underperformance is attributed to a combination of factors, including decreased activity on its layer-2 network, Shibarium, and investor interest shifting towards newer meme coins.
Shibarium's Decline in Activity Shibarium, Shiba Inu's layer-2 scaling solution, has experienced a significant reduction in network activity. According to data from ShibariumScan, the number of active accounts has dropped below 500, with only 33 new accounts added on October 8. Transaction volumes have also declined, as evidenced by a substantial drop in the average transaction fee, which has plunged 91% to 0.005 BONE from last month’s high of 0.062 BONE.
The decline in Shibarium’s transactions and fees is particularly concerning for Shiba Inu because a portion of the BONE token fees are converted into SHIB and burned. This burn mechanism helps reduce the circulating supply of SHIB, potentially increasing its value. However, with the lower network activity, the burn rate has also diminished, impacting SHIB’s price dynamics.
New Meme Coins Capture Investor Interest Another factor contributing to Shiba Inu's struggles is the growing popularity of newly launched meme coins, which have been delivering impressive returns. Coins like SPX6900, Popcat, Neiro (NEIRO), and Gigachad have captured the attention of traders seeking higher gains. For instance, SPX6900 has surged over 300% in just the past week, while Popcat, a meme coin based on the Solana blockchain, has skyrocketed by over 13,500% since January. This rotation into newer meme coins has overshadowed SHIB, leading to reduced trading interest and market activity.
SHIB's Technical Indicators Despite the challenges, Shiba Inu's technical indicators show some resilience. The daily chart reveals that the token bottomed out at $0.00000108 on August 5 and has since moved above the upper boundary of a falling wedge pattern. The token is currently trading above the 50-day and 100-day Exponential Moving Averages (EMAs), suggesting that it could be preparing for a potential breakout. Additionally, the Moving Average Convergence Divergence (MACD) indicator remains above the zero line, signaling bullish momentum.
For SHIB to gain more traction, it would need to break above the crucial resistance level of $0.0000187, which represents its highest swing from October 6. A successful move above this level could pave the way for a further rally towards $0.000021, its peak on September 27.
Open Interest in Futures Markets Drops Adding to the challenges, SHIB’s open interest in the futures market has also witnessed a sharp decline, falling to $44 million from a high of $70 million earlier in the month. The reduction in open interest indicates waning trader enthusiasm and may continue to exert downward pressure on the token's price unless significant buying momentum returns.
Outlook for Shiba Inu The Shiba Inu community remains optimistic about a potential recovery, but several hurdles must be cleared for the token to resume its uptrend. A resurgence in Shibarium's activity and successful price movement above key resistance levels could help reignite interest in SHIB. However, with the ongoing shift towards newer meme coins, Shiba Inu will need to deliver renewed utility or catalysts to stand out in an increasingly crowded market.
