As the current state of the cryptocurrency market shows a decline with Bitcoin [BTC] and most other altcoins slipping, Shiba Inu [SHIB] has also succumbed to this downward pressure, experiencing a 3% drop over the last 24 hours to reach a trading price of $0.0000185.
Although SHIB has managed to maintain a 26% increase over the past 30 days, concerns are rising from the derivatives market, indicating a potential shift in sentiment that could lead to further losses.
Are SHIB Derivative Traders Unwinding Their Positions?
An analysis of the derivatives market by CryptoCrypto reveals a significant rise in SHIB outflows to the highest level seen in two weeks. On 21st September, the outflows from derivative exchanges exceeded inflows by the largest margin since earlier this month.
This trend suggests that traders might be liquidating their existing positions to mitigate losses. The sudden surge in derivative exchange outflows has also coincided with a decrease in open interest from $60 million to $55 million at present, according to Coinglass.
These developments indicate that traders are leaving the market due to uncertainty following the failure of SHIB’s previous uptrend. The closure of these positions likely triggered a long squeeze that contributed to the price decline.
By 21st October, Shiba Inu’s funding rate had reached 0.0207%, marking the highest level since June, as numerous traders entered long positions. The current funding rate stands at 0.0046%, reflecting a significant decline.
The combination of decreasing funding rates, reduced open interest, and substantial outflows from derivative exchanges points to a scenario where long traders are exiting the market, revealing a deleveraging effect that could potentially drive SHIB prices downward in the immediate future as long traders transition to sellers to close their positions.
Analysis of Shiba Inu Price Movement
Shiba Inu has been trading in an ascending parallel channel, but a recent price drop has brought it to the lower boundary of this channel. Should the price fall below this threshold, SHIB may enter a downtrend.
The current support level for SHIB is being defended at $0.00001822. A breakdown below this support could push the price down to the 0.236 Fibonacci level at $0.0000168.
The Relative Strength Index (RSI) has declined to 56, indicating a decrease in buyer interest. However, sellers have yet to dominate, leaving room for a potential recovery. A drop in the RSI below 50 could signal a more significant decline for SHIB.
Furthermore, the Awesome Oscillator histogram bars have turned red, suggesting that bearish momentum is gaining strength.
As these bearish signals emerge, there has been a notable increase in Shiba Inu whale activity, with large transaction volumes surging by over 200% to $62 million. If these whales are acquiring SHIB, a continuation of the uptrend could be in the cards.