Watch Out: Shiba Inu May See a Downturn as Key Indicator Raises Concerns

Shiba Inu, like the broader meme coin market, is bracing for a correction amid Bitcoin’s recent bearish trend. The cryptocurrency encountered resistance at its immediate level, raising concerns about potential overvaluation. While indicators like the progress of Shibarium suggest bullish possibilities, a notable increase in a key on-chain trend is signaling that SHIB’s price might be overestimated.

January’s Historical Volatility for SHIB
Approaching January 2024, Shiba Inu’s price is gearing up for another round of volatility, judging by its historical performance during this month. Over the past three years, SHIB has witnessed significant price swings in January.

In January 2022, SHIB concluded the month with a substantial 35.8% decrease in value. Contrastingly, January 2023 saw a remarkable turnaround, with SHIB recording a significant 46.34% increase by month’s end. Analyzing SHIB’s January price changes over these years yields an average and median value change of around 5.24%. While relying on past performance for predicting future trends carries risks, recent large-scale whale activities, including substantial token transfers, have sparked concerns about increased volatility in January.

Bearish Trend Concerns and NVT Ratio Surge
Recent whale activities, including a transfer of 4.25 trillion tokens worth $44.91 million and another transfer of 2.28 trillion tokens on Dec. 26, have fueled worries about their potential impact on Shiba Inu’s price trends. These moves, closely monitored by Whale Alert, coincide with a surge in Shiba Inu’s NVT ratio (network value to transaction), climbing from a low of 59 to above 205 in just a week. This surge indicates that the transaction value isn’t keeping pace with the increasing network value, signaling a potential overvaluation.

Correction Path for Stability
To address the overvaluation concern, the network value needs to decrease to align with the transaction value, restoring stability to the NVT ratio.

What Lies Ahead for SHIB Price?
Bears have successfully pushed the SHIB price below the 20-day Exponential Moving Average (EMA) on the 4-hour chart. However, bulls are staunchly defending against a decline below the ascending support line. Currently trading at $0.00001066, a 0.67% increase from yesterday’s rate, SHIB faces a pivotal moment.

The 20-day EMA remains relatively flat, and the Relative Strength Index (RSI) hovers around the midpoint, indicating a balance between supply and demand. If bears maintain control, a sustained drop below EMA20 and the support line could lead to a decline to the $0.000009 level.

Buyers seeking control must push the price above the resistance zone of $0.0000112 to $0.000012. Achieving this breakthrough could propel the SHIB price upward, targeting $0.000016 in January.