Shiba Inu (SHIB), the popular meme-based altcoin, has recently experienced a notable price decline that triggered widespread bearish sentiment across the crypto market. Over the past week, SHIB dropped approximately 10%, causing many traders to open short positions in anticipation of further downside.
However, if the token rebounds and recovers this 10% loss, it could result in more than $52 million in short liquidations, according to on-chain data analysis. A short liquidation occurs when traders betting against a token are forced to buy it back at higher prices to close their positions, creating strong upward momentum.
This potential cascade of short liquidations could turn the bearish tide into a bullish rally, benefiting long-term SHIB holders and swing traders who are looking for a breakout.
Bearish Sentiment Rises Amid Decline in Active Wallets
While a price rebound could liquidate short sellers, several warning signs have also emerged. Notably, the number of active Shiba Inu addresses dropped by 36% in the last 48 hours. This sharp decrease indicates a decline in investor confidence and signals that many traders may be exiting their SHIB positions amid growing uncertainty.
A drop in active addresses often reflects low market participation and could hamper any recovery attempts unless buying volume returns strongly.
SHIB’s Key Resistance Level in Focus
As of the time of writing, Shiba Inu is trading at $0.00001407, slightly below a crucial resistance level at $0.00001435. Analysts suggest that this price level will be key in determining SHIB’s short-term direction.
If SHIB fails to break this barrier, the altcoin could remain in a consolidation range between $0.00001435 and $0.00001317, providing a buffer against further liquidation risks. This sideways action might keep volatility in check but also delay any potential bullish breakout.
Conversely, a successful breakout above $0.00001435 followed by a flip of that level into support could push SHIB back to $0.00001553, marking a full 10% recovery. Such a move would invalidate the current bearish sentiment and possibly ignite a short squeeze, turning the market outlook positive once again.
Market Outlook
For now, SHIB remains at a crossroads. Traders should watch closely for any price movement toward or beyond the resistance level. Should momentum return and short positions get squeezed, SHIB could see rapid gains. However, if investor activity continues to fall, recovery efforts may stall.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments are volatile and risky. Always conduct your research before making any investment decisions.
