Shiba Inu (SHIB) has been on a gradual decline for the last month, shedding more than 24% of its value during this time. Shiba Inu price trades at $0.0000113 today, June 21, but technicals suggest that another 50% drop could be imminent. Moreover, a recent spike in the SHIB burn rate by 7,200% in 24 hours has not done much to buoy investor confidence.
Shiba Inu Price Faces 50% Drop as it Tests Key Support
The weekly SHIB price chart shows that this top meme token has been on a steep decline for more than one year, but it keeps defending the support level at $0.0000113. By defending this support despite the downward price movement, SHIB has formed a descending triangle pattern.
A descending triangle is often bearish as it shows that sell-side pressure has been gradually rising while buyers remain on the sidelines. If Shiba Inu price falls below $0.0000113, it could crash by 50% to a multi-year low of $0.0000054.
Falling below $0.00001 could be detrimental to the SHIB price performance, as adding one more zero could weaken investor confidence.
The odds of a 50% crash happening are also amplified by the 50-day SMA of $0.0000169. Shiba Inu price is around 54% below this SMA, and it needs to crossover above it to confirm that the short-term momentum has shifted to bullish. This SMA level also lies at the upper trendline of the descending triangle.
The RSI also confirms that the Shiba Inu price forecast is bearish, with its reading of 39 showing aggressive selling behaviour. This also indicates that buyers are not willing to buy the dip despite the price recording a steady decline for more than a year.
The bearish technicals evident on the weekly timeframe match a previous CoinGape article that noted that the SHIB MVRV formed a death cross. This formation shows that short-term holders are beginning to realize losses.
SHIB Burn Rate Spikes 7,200%
The Shiba Inu burn rate has surged by 7,200% in the last 24 hours, according to data from Shibburn. Following this spike, more than 12 million SHIB tokens have been removed from circulation, which could be bullish for the Shiba Inu price if demand also rises.
The surging burn rate also coincides with a lack of strong fundamentals, as activity on the Shibarium layer two network dwindles. Data from DeFiLlama shows that after the May 11 swing high of $3.14 million, Shibarium’s TVL has declined to $1.89 million. This indicates that it has been slashed by nearly half within six weeks.
Shiba Inu price also remains at risk of further dips because of the sharp decline in funding rates, as depicted by Coinglass data. This metric has fallen sharply to the lowest level in nearly a month, indicating that traders are opening short bets as they anticipate the price to decline.
The combination of bearish technicals, weakening network activity, and a negative market sentiment shows that the SHIB price may crash further. The recent spike in burn rate has also failed to cool the markets.
