The price of Shiba Inu rose by 7% over the past 24 hours, breaking a downward trend that lasted for months, causing significant losses for investors.
Although this rise brings optimism, it may not be sustainable due to significant developments that may affect the asset's price trajectory.
Shiba Inu may face a decline
The network value to transaction (NVT) ratio for Shiba Inu recently reached an eleven-month high. This increase indicates that the network valuation exceeds its transaction activity, suggesting that the asset has become overvalued.
The rise in the network value to transaction (NVT) ratio raises concerns that the current price of Shiba Inu may not be sustainable. When the asset becomes overvalued, it often experiences a decline as the market adjusts. This may prevent Shiba Inu from maintaining its recent upward momentum.
Despite the overvaluation of Shiba Inu, technical indicators show signs of bullish momentum. The Relative Strength Index (RSI) is approaching the positive zone, surpassing the neutral level of 50.0 for the first time in over a month and a half.
An RSI above 50.0 typically indicates increasing bullish optimism, suggesting an improvement in market sentiment. This shift in momentum may help reduce the likelihood of a price correction due to overvaluation.
As the Relative Strength Index continues to rise, it may provide the necessary momentum for SHIB to maintain its upward movement, potentially offsetting the negative pressure from overvaluation.
SHIB price needs to secure support
The price of Shiba Inu rose by 7%, reaching $0.00001198 at the time of this report. This rise allowed Shiba Inu to break out of a two-month downtrend, indicating a potential shift in market sentiment.
However, this rise faces resistance, and maintaining price increases may be difficult due to concerns about the currency's overvaluation.
Shiba Inu price analysis.
SHIB is currently testing the level of $0.00001188 as potential support. However, due to overvaluation concerns and market sentiment factors, this may be unlikely. Depending on market adaptation, the price of SHIB may stabilize between $0.00001188 and $0.00001141 or drop further to $0.00001059.
If bullish momentum prevails and the overvaluation is surpassed, SHIB's price could rise to the resistance level of $0.00001252. Breaking this level would open the door for further gains, pushing SHIB towards $0.00001344, negating the bearish hypothesis and potentially expanding the upward trend.