Shiba Inu (SHIB), the second most valuable meme coin, did not escape the market carnage that occurred on August 5. A few days later, the token jumped after initially hitting a five-month low.
The rebound sparked speculation of a significant price increase. However, SHIB has not lived up to these expectations, although it has signaled that the current value may be a rare discount.
Discounted Shiba Inu Wants to Break Free
On-chain data from Santiment looked at the DAA divergence of the Shiba Inu price. DAA in this metric stands for Daily Active Addresses and measures the rate at which users participate in the blockchain. An increase in this metric increases the likelihood of a price increase, while a decrease indicates the opposite.
When combined with the token price, the DAA price divergence provides insight into the entry and exit signals. Typically, if the readings are negative, the price is rising faster than the active addresses, which usually indicates a sell signal.
However, if the readings are positive, it means that user participation is outpacing the price increase, which is a buy signal. At press time, DAA prices SHIB is 12.17%, which suggests the latter and provides a buy opportunity.
Read more: 12 Best Shiba Inu Purses (SHIB) in 2024
Similarly, the market value to realized value (MVRV) ratio also confirms this bias. This ratio uses the level of market profitability to determine whether a cryptocurrency is undervalued or overvalued relative to its fair value.
It also helps to identify tops and bottoms. In particular, if the MVRV ratio is extremely high, holders have a lot of unrealized profit, which suggests they may be ready to sell. If this happens, it puts downward pressure on the price.
On the other hand, a low ratio suggests a low level of unrealized profits — sometimes, increased losses. If so, market participants will be more likely to hold than sell, which can provide stability to the cryptocurrency price.
As shown above, the ratio in the case of SHIB is 0.69. This indicates higher unrealized losses than profits. Thus, as historical data confirms, this may be a point for increased accumulation before a significant rebound occurs.
SHIB Price Forecast: Turnaround Not Imminent
Despite the bullish signals identified in the chain, the technical outlook is contrasting. At press time, SHIB is trading at $0.000014.
According to the daily chart, SHIB formed a descending channel between mid-July and August 7 before making a small rebound the following day. For context, a descending channel occurs when two descending trend lines make lower highs (resistance) and lower lows (support), indicating a bearish continuation.
Meanwhile, the token has not yet fully broken out of this pattern, which suggests that a significant rally may not be possible. Moreover, the Bull-Bear Power (BBP), which shows the ratio between the strength of bulls and bears, is negative.
Usually, a positive BBP value indicates that the bulls are in control. But since the opposite is true for the Shiba Inu token, it means that the bears have more power.
Read more: Shiba Inu (SHIB) Price Forecast 2024/2025/2030
If this continues, SHIB price could consolidate between $0.000012 and $0.000014. If selling pressure intensifies, the token could attempt to retest the swing low at $0.000010.
However, an increase in buying pressure could disprove this thesis. If this happens, the SHIB price could jump to $0.000017.
