Shiba Inu faces a sharper plunge: technical and fundamental indicators point to more significant declines

The situation of Shiba Inu (SHIB) is rapidly deteriorating on multiple fronts, setting the stage for a more pronounced decline in the coming weeks. Technical analysis combined with concerning fundamental data reveals why analysts are projecting steeper downward movements.

Fundamental indicators reveal a collapse in SHIB’s pillars

The largest meme coin built on the Ethereum network (ETH) has lost nearly half of its value since its yearly highs, ranking among the worst-performing assets in 2024. This plunge does not happen in a vacuum: it reflects the simultaneous deterioration of its fundamentals.

The token burn mechanism, central to SHIB’s value proposition, has experienced a dramatic collapse. In the last 24 hours, the burn rate has decreased by 86%, leaving only 1.6 million tokens being removed from circulation daily. This exponential decline undermines one of the main deflationary arguments supporting the project’s bullish narrative.

The ecosystem built by the developers also fails to generate momentum. Shibarium, the sidechain designed to transform SHIB from a simple meme coin into an asset with utility, shows signs of paralysis. The network records fewer than 400 active addresses daily, while new accounts enter at a minimal rate, fewer than 10 per day. ShibaSwap, intended as a burn and utility engine, also does not drive the expected adoption.

Whale holders and Smart Money intensify their exit

SHIB whales have shifted their strategy toward aggressive deleveraging. Their holdings have contracted dramatically: from 220 billion tokens on October 11 to just 107 billion today. This massive withdrawal of large positions often precedes more pronounced downward movements, creating a cascade effect in the retail market.

Qualified investors with Smart Money strategies are also abandoning positions. They have reduced their exposure by 23.5% over the last three months, bringing their holdings to 43.50 billion. When large players withdraw in a coordinated manner, liquidity evaporates and prices can fall steeper without significant resistance.

Derivatives markets confirm weakness

Futures markets present another concerning indicator. Open interest has collapsed to $67 million, far from the annual peak exceeding $600 million. This contraction indicates traders are reducing leverage and preparing for greater volatility. Liquidations volume is also rising, suggesting those remaining in positions expect more drastic moves.

Demand in spot and derivatives markets has consistently decreased this year, reflecting growing disinterest in the token.

Price chart confirms decisive technical breakdown

Daily chart analysis reveals that SHIB has broken through critical technical levels. It falls below the support at $0.00001, a level that represented the lower bound of a descending triangle pattern established since October. The price is also trading below the 50-day moving average, confirming the bearish trend.

The formation of a bearish pennant, operating since October 9, has resulted in a downward breakout projecting an initial target of $0.0000085, coinciding with the lowest level reached so far this year. If this movement materializes, it would open the door to even steeper declines if support at that level also gives way.

Perspective: Convergence of weak signals

The most concerning aspect is the simultaneous convergence of all these negative factors. It is not just a single whale selling or an isolated technical correction: it is the coordinated deterioration of ecosystem utility, the exit of institutional and retail capital, and the breach of technical supports. This combination historically anticipates steeper downward movements that could surprise bullish positions.