The Potential Risks of Derivative Traders Amplifying SHIB Losses
At the current moment, the cryptocurrency market is experiencing a downturn with Bitcoin [BTC] and various altcoins showing negative trends. Shiba Inu [SHIB] has also not been immune to this bearish pressure, witnessing a 3% drop in the last 24 hours to be valued at $0.0000185.
Despite this recent decline, SHIB has managed to maintain a 26% increase over the past month. However, the derivative trading landscape indicates a changing sentiment that could potentially lead to further financial setbacks.
Is there a deleveraging trend among SHIB derivative traders?
An evaluation of the derivatives market by CryptoCrypto has revealed a notable spike in SHIB outflows, reaching the highest levels observed in two weeks. On the 21st of September, the outflows from derivative exchanges surpassed inflows by the largest margin seen since the beginning of the month.
This trend suggests that traders might be closing their positions to mitigate losses stemming from liquidation scenarios.
The surge in outflows from derivative platforms has coincided with a decrease in open interest from $60 million to $55 million according to data from Coinglass at the present moment.
These developments signal a growing unease among traders following the failed uptrend of SHIB. The closure of these positions likely triggered a long squeeze effect, contributing to the drop in prices.
On the 21st of October, Shiba Inu’s funding rate spiked to 0.0207%, reaching its highest level since June, attributed to a significant number of traders initiating long positions. Subsequently, this rate plummeted to 0.0046% as of now.
Decreasing funding rates, accompanied by reduced open interest and substantial outflows from derivative exchanges, indicate a departure of long traders from the market. This signifies a process of deleveraging that could drive SHIB prices downwards in the short term as long traders shift towards selling to close their positions.
Analysis of Shiba Inu’s Current Price Movement
Shiba Inu has been following a pattern within an ascending parallel channel. However, the price has dipped towards the lower boundary of this channel, and a breach below it would signal the initiation of a downtrend.
At present, SHIB is managing to hold the support level at $0.00001822. In the event of this support failing, the price could potentially plummet to the 0.236 Fibonacci level at $0.0000168.
The Relative Strength Index (RSI) has fallen to 56, indicating a decrease in buyer interest. Nevertheless, sellers have not yet dominated the market, providing SHIB with a chance for a potential recovery. A drop in this metric below 50 could signify a sharper decline for SHIB.
The reorientation of the Awesome Oscillator histogram bars to red implies a strengthening bearish sentiment in the market.
As these bearish signals come to the forefront, the whale activity around Shiba Inu has seen a surge, with a notable increase of over 200% in large transaction volumes amounting to $62M. If these whale investors are buying, SHIB might be poised to resume an upward trajectory.