The leading memecoin, Shiba Inu (SHIB), has dropped by nearly 10% in the past week, bringing its price down to $0.000012.
However, signs of a bullish reversal are beginning to emerge, as both on-chain indicators and technical indicators suggest a potential recovery in demand for the memecoin.
Shiba Inu bulls are feeling uneasy due to the falling prices.
On the daily chart, the Chaikin Money Flow (CMF) indicator for SHIB - which tracks the weighted inflows and outflows of capital - has been trending upwards, even as the price of the memecoin declines. At the time of writing this report, the momentum indicator was at 0.02, surpassing the neutral zero line.
This trend forms a bullish divergence, indicating that buying pressures are quietly increasing in the SHIB spot markets, even as overall market sentiment remains cautious. On-chain data supports this bullish outlook.
According to Santiment, the net realized profit/loss for the SHIB network (NPL) remains negative, indicating that most holders are incurring losses. Typically, a negative delinquency rate means reduced selling pressure, as investors often hesitate to offload losing assets.
Longer holding periods resulting from this may reduce the circulating supply of SHIB, creating conditions that could support a short-term recovery in the price of the memecoin. Furthermore, SHIB futures traders share this bullish sentiment.
This is reflected in the positive funding rate of the coin, which was 0.0082% at the time of publication. The funding rate is a recurring fee paid between traders in perpetual futures to keep the contract price aligned with the spot market price.
When the price is positive, long traders pay short traders. This indicates that bullish sentiment is prevalent among SHIB futures traders, as demand for long positions is higher.
SHIB indicates a recovery towards $0.000014.
At the time of publication, SHIB is trading at $0.000012. With technical indicators showing early bullish signals, the memecoin may reverse its recent downward trend and rise towards the $0.000014 level in the short term.
However, to initiate a sustainable recovery, SHIB must first break through the key resistance level: the 20-day exponential moving average (EMA). This forms a barrier above the coin's price at $0.000013.
A decisive breakout above the exponential moving average could attract renewed buying interest in SHIB and confirm a short-term bullish trend reversal. On the other hand, if buying pressure recedes, the price of SHIB could drop to $0.000010.