The trend of whale flows and token burns surging, while the NVT ratio warns of overvaluation risk
Recently, whale flows have surged, while SHIB token burn activity has grown significantly, surpassing 1.19 billion tokens in the past week – an increase of 14.99 times. Shark investors have made a strong shift, reflecting renewed confidence following updates on multi-gas integrated smart contracts and improvements to Shibarium's smart contract.
Positive shift in token burn activity
Token burn activity is ongoing, with a total of 494.8 billion SHIB tokens burned in the last 24 hours, an increase of 958%. This indicates an increasingly high turnover rate of tokens, reflecting the eagerness of investors in a bustling trading environment.
Impact of token burn activity
Strong burn activity is a sign of cryptocurrency depletion and reduced circulating supply, thereby facilitating price increases in the long term. Investors looking to leverage a deflationary strategy expect SHIB to increase in value even more as these activities become sustainable.
Source: Santiment
SHIB's value is rising faster than valuation metrics
While token flows and stock prices show positive signals, SHIB's NVT ratio has surged to 1.194 – the highest in recent months. This index compares market capitalization with trading volume. A spike often warns of overvaluation of the token.
Risk of a gap between value and liquidity
Although short-term traders may continue to accumulate, the increase in NVT suggests that SHIB's price may be outpacing the actual utility of the network. Typically, spikes in this index predict corrections or a cooling off in the long run.
Warnings from the NVT ratio
In this context, investors need to be cautious. As trading volume has not kept pace with market capitalization, the risk of a correction will significantly increase. This trend could lead SHIB to face price correction phases if there isn't sufficient data on actual on-chain activity increase.
Source: Santiment
Will the growth of SHIB's network be enough to maintain the upward momentum?
Surprisingly, SHIB's growth rate has plummeted to just 476 new addresses registered – a stark contrast to whale flows and high token turnover. While large investors are active, the number of new addresses joining remains limited.
Paradox between value and network expansion
The lack of growth in new users could hinder SHIB's ability to sustain long-term upward momentum. Typically, strong price increases require significant increases in new wallet creation activity and community advancement, which has yet to occur.
Real participation is needed to sustain upward momentum
For SHIB to escape this deficit phase, promoting practical usage activities of the network and naturally expanding the community is key. Breakthrough projects and new collaborations may create more stable positive momentum in the future.
Source: Santiment
Can SHIB break the descending wedge pattern to achieve a 27% increase?
Technical analysis shows SHIB is accumulating in a descending wedge pattern – a bullish reversal pattern – while holding key support levels. Trend indicators suggest the stock is actively accumulating below the resistance line, expected to break out to the target area of $0.00001448.
Proof of breakout potential
Price action shows that the cryptocurrency is accumulating below the resistance line, with the potential to push prices higher if the market confirms a breakout. However, success still depends on maintaining a positive upward trend, even though fundamental factors regarding network decline still exist.
The breakout tree will be the key point
Only when the descending wedge pattern is successfully broken will the market truly shift to a positive state. This will be a confirmation signal for SHIB's short-term upward momentum, helping investors transition from a cautious state to a more solid confidence.
Source: TradingView
In summary, recent indicators show a complex backdrop for SHIB. Whale flows and token burn activity support positive sentiment, but the high NVT ratio and lack of network growth threaten fundamental factors.
Without a real increase in user and transaction activity, the ability of SHIB to sustain the surge remains in doubt. However, if the descending wedge pattern plays out correctly, along with a recovery in on-chain momentum, there is short-term potential for further price increases.
Source: https://tintucbitcoin.com/shiba-inu-tang-6-306-breakout-hay-trap/
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