Shiba Inu’s price has risen by 7% in the last 24 hours, breaking free from a multi-month downtrend that caused significant losses for investors.
While this rally brings optimism, it may not be sustainable due to an important development that could affect the asset’s price trajectory.
Shiba Inu Could Face a Reversal
The Network Value to Transaction (NVT) ratio for Shiba Inu has recently reached an 11-month high. This increase suggests that the network’s valuation is surpassing its transaction activity, a sign that the asset is becoming overvalued.
The rise in the NVT ratio raises concerns that SHIB’s current price may not be sustainable. When an asset becomes overvalued, it often experiences a pullback as the market adjusts. This could prevent Shiba Inu from maintaining its recent upward momentum.
Despite the overvaluation, Shiba Inu’s technical indicators are showing signs of bullish momentum. The Relative Strength Index (RSI) is inching toward the positive zone, moving above the neutral mark of 50.0 for the first time in over a month and a half. An RSI above 50.0 typically signals growing bullish strength, suggesting that market sentiment is improving.
This shift in momentum could help counteract the potential for a price correction due to overvaluation. As the RSI continues to rise, it may provide the necessary push for SHIB to maintain upward movement, potentially balancing out the negative pressure caused by the overvaluation.
SHIB price Needs To Secure Support
Shiba Inu’s price has climbed by 7%, reaching $0.00001198 at the time of writing. This upward movement has allowed SHIB to escape a two-month-long downtrend, signaling a potential shift in market sentiment. However, this rally faces resistance, and sustaining the price increase may be challenging due to the overvaluation concerns.
SHIB is currently testing the $0.00001188 level as potential support. However, given the overvaluation and market sentiment factors, this may be unlikely. Depending on how the market adjusts, SHIB could consolidate between $0.00001188 and $0.00001141 or fall further to $0.00001059.
If the bullish momentum prevails and overcomes the overvaluation, SHIB’s price could rise to the resistance level of $0.00001252. A breach of this level would open the door for further gains, pushing SHIB towards $0.00001344, thus invalidating the bearish thesis and potentially extending the bullish trend.
Disclaimer
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