Shiba Inu: Could a Supply Squeeze Ignite SHIB’s Price Recovery?
Shiba Inu (SHIB) is currently exhibiting signs of a potential market shift as critical on-chain indicators and supply metrics align in a way that could spark a notable rebound. The focus has now shifted to whether a tightening SHIB supply — influenced by aggressive token burns and declining exchange reserves — could trigger a supply shock capable of reversing the current downtrend.
Burn Activity Signals Long-Term Supply Contraction
Recent data highlights a surge in SHIB burn activity, with a staggering 7-day spike exceeding 2,000%. This suggests a strategic effort to reduce the token’s circulating supply. While short-term volatility is evident — as shown by a significant drop in burn volume over the last 24 hours — the cumulative trend points to a gradual supply contraction. This contraction increases the probability of a supply-driven price response, especially if demand holds steady or improves.
Exchange Reserves Plummet as Buyers Step In
One of the most compelling signs of a potential supply shock is the sharp drop in SHIB held on exchanges. Exchange reserves have fallen by 6.79%, signaling that fewer tokens are readily available for sale. Historically, such reductions are associated with increased investor accumulation and reduced sell-side pressure. This trend supports a healthier market environment where demand can drive prices upward with less resistance from sellers.
Demand Zone Holds Strong Amid Market Weakness
Despite broader market pullbacks, SHIB has consistently defended the key demand zone between $0.00000885 and $0.00000900. Multiple price reactions within this zone indicate a strong buyer presence, with investors stepping in to accumulate each time prices dip. This resilience strengthens the foundation for a potential breakout, especially as technical indicators begin to favor the bulls.
Technical Indicators Hint at a Momentum Shift
From a technical standpoint, SHIB is hovering near the upper boundary of a descending price channel. If it breaks above this channel, a rally toward $0.00001029, $0.00001118, and even $0.00001301 becomes increasingly plausible. The Relative Strength Index (RSI) supports this outlook, currently resting near 39 and forming higher lows — a subtle but meaningful sign of weakening bearish momentum. A push above the 50 mark on the RSI would further confirm a shift toward bullish control.
Buyer Dominance Evident in Order Flow Metrics
Spot Taker Cumulative Volume Delta (CVD) metrics further reinforce the bullish scenario. This indicator, which tracks net buying versus selling pressure, shows consistent buyer dominance. Market participants are absorbing sell orders during each retest of the demand zone, suggesting confidence in SHIB’s long-term value. Importantly, the order flow is steady rather than impulsive, hinting at sustainable accumulation rather than speculative spikes.
Supply Shock Narrative Gains Momentum
The convergence of falling exchange reserves, rising burn rates, and firm demand-zone reactions builds the case for a looming supply shock. With fewer tokens available to sell and buyers exhibiting increasing conviction, the balance of power is gradually shifting. This environment creates fertile ground for a breakout, particularly if volume increases near current resistance levels.
Broader Market Context and SHIB’s Role
SHIB’s dynamics are occurring against a backdrop of cautious optimism in the broader crypto market. With Bitcoin and Ethereum attempting to reclaim key levels, altcoins like SHIB are beginning to show signs of life. For meme coins, which often react more aggressively to market sentiment, a shift in technical structure and supply metrics could lead to outsized moves.
The Role of Community and Ecosystem Developments
Beyond market mechanics, Shiba Inu’s community and ecosystem growth continue to play a role in long-term demand. Developments like Shibarium, the project’s Layer-2 blockchain, and expanding use cases within decentralized finance (DeFi) could further support SHIB’s valuation. If these fundamentals align with technical trends, the token could see renewed investor interest.
What to Watch for Next
Investors should closely monitor:
– A confirmed breakout above the descending channel.
– Sustained RSI movement above 50.
– Continued decrease in exchange reserves.
– Rising on-chain activity and wallet growth.
– Burn rate consistency over the coming weeks.
If these factors continue to develop, the odds of SHIB entering a strong recovery phase will increase.
Final Thoughts
Shiba Inu is gradually building a case for a bullish reversal, supported by tightening supply, steady buyer activity, and improving technical indicators. While short-term volatility in burn rates introduces some uncertainty, the broader trend favors a potential rebound. If demand sustains and technical levels are breached, SHIB could be poised for a meaningful rally, driven in large part by a developing supply shock.