Shiba Inu (SHIB) Faces Extensive Sell-Offs: Time to Buy the Dip?

Shiba Inu (SHIB) price is experiencing significant declines, driven by worsening bearish market conditions and a surge in selling pressure. The dip seems not to be about SHIB specifically and at a first glance it looks like the whole market is dragging down the token with it. Naturally, it also means that other meme coins are not doing too well either. 

Main question right now is whether there is anything within the SHIB community that also drives the price down and it is exactly this that we investigate. Along with it, we will also entertain buying the dip and uncovering the forces that are once again pushing the market North. 

Investors’ confidence wanes

The price of Shiba Inu is at risk of further declines as holders continue to offload their assets. The supply of SHIB on exchanges has surged to a six-month high, indicating increased selling activity.

In the past 48 hours, over 4.66 trillion SHIB tokens, worth approximately $103 million, have been moved to exchanges. This indicates that investors are either cashing in on their gains or attempting to cut their losses. Even long-term holders, typically known for their stability, have started moving their assets.

Recent data shows multiple spikes in the age-consumed metric, which measures the total days lost by multiplying the amount of SHIB moved by the number of days since their last movement. These spikes suggest that significant amounts of SHIB, including older coins, are being transferred, a bearish signal for the asset.

SHIB price: critical support in focus

Shiba Inu’s price has already failed to break through the resistance at $0.00002584 on Gate.io, falling below the consolidation range between $0.00002584 and $0.00002267. The meme coin is now approaching a crucial support level at $0.00002093, which has held since April.

A drop below this level could push SHIB down to $0.00002000, marking a multi-month low. However, if the price manages to rebound from $0.00002093, SHIB might see a slight recovery, continuing its consolidation phase and invalidating the bearish outlook.

Buying the dip

When considering whether to buy a cryptocurrency asset when its price is down, there are several key factors to take into account. One of the main arguments in favour of purchasing SHIB during a downturn is the potential for significant gains if the asset rebounds. 

This strategy, often referred to as “buying the dip,” allows you to acquire more of the asset at a lower price, potentially increasing their returns if the market recovers. Historically, many have profited from buying during market lows, assuming they have chosen fundamentally strong assets that have the potential for long-term growth.

However, it is crucial to differentiate between a temporary dip and a prolonged bear market or a decline due to fundamental issues with the asset itself. Not all price drops are created equal; some are caused by broader market corrections or external economic factors, while others might be due to issues within the cryptocurrency project, such as security vulnerabilities, loss of key partnerships, or regulatory concerns. 

Conducting thorough research and understanding the reasons behind the price drop can help investors make more informed decisions. If the decline is due to temporary factors and the asset has strong fundamentals, buying the dip might be a viable strategy.

On the other hand, purchasing crypto during a downturn carries risks. The volatility inherent in cryptocurrency markets means that prices can continue to fall even after an initial dip, potentially leading to substantial losses. That usually happens until a substantial price support level is reached. Additionally, the psychological stress of holding a declining asset can lead to poor decision-making, such as panic selling at the bottom.

Why is the crypto market down?

The cryptocurrency market has been experiencing a significant downturn recently due to several interrelated factors. One major reason is the evolving macroeconomic landscape, particularly concerning U.S. interest rates and inflation expectations. At the beginning of the year, there was an anticipation of aggressive monetary easing by the Federal Reserve. 

However, recent data and signals from the Federal Reserve have shifted market sentiment. Stronger-than-expected U.S. employment data indicated that the labor market is coping well with tight fiscal policies, reducing the likelihood of imminent rate cuts. This has led to a “risk-off” mode among investors, affecting risk assets like cryptocurrencies negatively​​.

SHIB value to rebound?

Shiba Inu (SHIB) has experienced remarkable gains since its inception, exemplifying the volatile yet rewarding nature of the cryptocurrency market. Launched in August 2020, SHIB saw exponential growth in 2021, driven by a combination of community enthusiasm and strategic marketing, often dubbed the “Dogecoin killer” due to its ambitious roadmap and meme-based appeal. 

By October 2021, SHIB had surged over 700,000% from its initial price, creating millionaires out of early investors​​. This meteoric rise underscores a pattern in the crypto market where significant dips are often followed by substantial recoveries. Despite current downturns, history shows that the cryptocurrency market is cyclical, with periods of decline typically paving the way for future growth and new opportunities. Hence, while dips may seem daunting, they are an integral part of the market’s natural rhythm, and brighter days often follow.

Image: fellowneko