Shiba Inu (SHIB) Price Increased by 50% in the Past 9 Days, is a Correction Imminent?

TL;DR

Shiba Inu (SHIB) surged 50% in two weeks, but indicators like high FOMO and an elevated RSI hint at a potential pullback.The rally is possibly fueled by overall market momentum, Shibarium advancements, a spike in burn rate, and the expected launch of a Shiba Inu-related stablecoin.

Further Rally or Time for a Correction?

Shiba Inu (SHIB) is undoubtedly among the top crypto performers as of late, registering a 50% price increase in less than two weeks. Currently, it trades at around $0.0000196, representing a 10-week high. Its market capitalization exceeded $11.5 billion, making it the 14th-biggest cryptocurrency. 

SHIB Price, Source: CoinGecko

Despite the overall bullish conditions, some important elements signal that SHIB’s valuation may head south soon. Crypto analytics platform Santiment estimated that the FOMO (Fear of Missing Out) had reached a “significant” level, meaning the local top might be reached. 

FOMO is a psychological phenomenon where investors feel anxious about missing a potentially profitable opportunity, leading them to make impulsive and emotionally driven decisions. It often occurs when prices are already on an upward trend, coinciding with hype on social media platforms.

The price surge of cryptocurrencies during high FOMO periods is often unsustainable as it’s driven more by emotions than fundamentals. As such, it might indicate that a pullback could be imminent. 

Another factor suggesting that SHIB’s uptick might be interrupted soon is the asset’s rising Relative Strength Index (RSI). The technical analysis tool measures the change and speed of price movements. It varies from 0 to 100, with readings above 70 hinting that SHIB is overbought and potentially heading toward a correction. The RSI is currently set at a seven-month high of 90.

What’s Fueling the Rally?

SHIB’s price revival aligns with the bullish condition of the entire cryptocurrency market, where Bitcoin (BTC) trades just south of $66,000, while Ethereum (ETH) surpassed $2,650.

Other elements potentially benefiting its valuation include the further advancement of the layer-2 scaling solution Shibarium and the burn rate, which has exploded by almost 34,000% in the past 24 hours. 

Last but not least, the resurgence could be linked to the recent announcement that the SHIB team is working toward launching a stablecoin called SHI. LUCIE (Shibarium’s Marketing Strategist) said the product will see the light of day once the infrastructure is “fully prepared, ensuring stability and utility within decentralized finance.”

They also claimed that the stablecoin will provide price stability, increased adoption, enhanced utility, DeFi integration, community empowerment, and other merits.