Shiba Inu coin price has crashed and is about to form a high-risk pattern that may fuel further downside in the next few weeks. The SHIB token peaked at $0.00003340 in December and has plunged by about 40% to the current $0.00002. So, is the SHIB coin a good buy as a death cross approaches?
Shiba Inu coin price technical analysis: death cross pattern nears
The daily chart shows that the SHIB price peaked at $0.00003340 and then retreated to the psychological point at $0.000020.
Technicals suggest that the SHIB coin has more downside. It has formed what looks like a head-and-shoulders pattern, which often leads to more downside in the longer term.
The coin is also about to form a death cross pattern, which happens when the 50-day and 200-day Weighted Moving Averages (WMA) cross each other. The spread between the two averages has continued to narrow, and currently stands at just 3.1%, down from over 10% a few days ago.
A death cross is often seen as being one of the riskiest chart patterns in the financial market. That’s because it is a sign that bears have overcome the bulls, which leads to more downside.
The coin has also formed a double-top chart pattern at $0.00002490. Like the death cross, this is also a highly popular bearish chart patterns.
The Shiba Inu price has also moved to the closely watched 61.8% Fibonacci Retracement level. Therefore, there is a risk that the coin will have a strong bearish breakdown in the next few weeks. If this happens, the next price to watch will be $0.00001850, its lowest swing on December 20.
A drop below that support level will point to more downside, potentially to the 78.6% point at $0.00001568, down by 23% below the current point.
Shiba Inu’s bearish outlook will remain as long as it is below the double-top point at $0.00002490.
Why has SHIB coin crashed?
There are two main reasons why the Shiba Inu price has crashed in the past few months. First, it has plunged as investors have rotated to newer and shinier meme coins. Most recently, they moved to the Official Trump and Melania meme coins that surged before the inauguration. Some cash moved from old meme tokens to these ones as investors looked for strong gains.
A good example is the daily volume figures. SHIB had a 24-hour volume of $163 million, much lower than Official Trump’s $4.45 billion and Pudgy Penguins’ $169 million. Melania Trump’s meme coin had a daily volume of $215 million.
Second, while the Shibarium is growing, data shows that the fees collected have continued falling. Shibarium’s completed transactions jumped to over 847 million, an impressive figure for a recently launched network.
The average transaction fee has dropped 0.000064 BONE from 0.0003 BONE a month earlier. At the same time, the total sum of BONE fees collected by the network has continued to fall thos year and stands at less than 400 BONE per day.
These fees are important because they signal whether the layer-2 network is growing or not. They are also crucial because their impact on Shibarium’s burn rate has dropped.
Read more: ‘I don’t know much about it’: President Trump on meme coin launch
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