Shiba Inu Price Analysis: 2 Reasons SHIB Could Break $0.000020 Despite POPCAT Breakout

Shiba Inu Price Analysis:

Shiba Inu price opened trading at $0.000018 on Monday, Oct 7 2024, up 20% over the weekend. On-chain data analysis reveal a confluence of bullish indicators that could propel SHIB above the $0.0000020 level in the week ahead.

SHIB Price Hits 20% Gains as Investors Lean into Solana Memes

The global memecoin markets burst into life again over the weekend as investors’ risk appetite grows on rife expectations of further US Fed rate cuts ahead.

Notably, amid the market recovery, Solana memes have dominated media trends, gaining investor mindshare. However, legacy memes like Shiba Inu and Dogecoin continue to deliver considerable growth over the weekend.

The chart above shows SHIB price had dropped as low as $0.000015 on Friday Oct 4. But as the positive US Non-Farm Payrolls data triggered bullish tailwinds, Shiba Inu price grew by 20.15% over the weekend, grazing the $0.000019 mark at the time of writing on Monday Oct 6.

In comparison, POPCAT, one of Solana’s top 5 performing memes gained a whopping 51.31% within the same period. This shows that while traders  leaning more into Solana memes, legacy tokens like SHIB and DOGE are not essentially losing market share, creating a larger pie.

Shiba Inu Derivatives Markets data Hints Bullish Dominance

Shiba Inu’s recent derivatives market trends suggest an increasingly bullish outlook based on both open interest (OI) and funding rate dynamics.

First, Coinglass’ open interest chart below monitors capital inflows and outflows within as specific cryptocurrency’s derivatives market.

SHIB’s open interest in futures contracts surged from $43.5 million to $51.5 million, between Oct 4 to Oct 7, marking an 18% increase.

Though the growth in OI lagged behind the 20.15% price surge, this points to the rally being more heavily supported by spot market participation rather than highly speculative trades.

Two Reasons Why SHIB’s Rising Open Interest is Bullish:

• Spot Market Support: The fact that price gains outpaced OI growth is typically bullish, as it signals that investors in the spot market (those who are buying actual tokens rather than betting on futures) are driving much of the price action.

Spot market rallies tend to be more durable, as they reflect stronger demand and conviction from long-term holders rather than traders seeking short-term gains. This suggests that the recent price increases are backed by solid investor sentiment.

• Increased Commitment: The OI increase of $8 million means more traders are committing capital to the SHIB market, showing a broader belief in the continuation of upward momentum.

A rise in OI during a price rally often signals that new money is entering the market, further reinforcing the bullish trend. The influx of capital hints that participants are confident about the sustainability of the recent price action, making it more likely that SHIB could breach the $0.000020 mark soon.

The funding rate for SHIB futures offers further confirmation of this bullish trend. Rising from -0.0123% on October 3 to 0.0087% on October 7, the funding rate has surged by a staggering 171% over the past week. This marks SHIB’s highest funding rate since October 1, when broader market liquidations occurred amidst geopolitical unrest in the Middle East.

The rapid recovery in funding rates signifies that traders are shifting back to long positions, with bullish sentiment breaking out from last week’s cautious stance.

Two Reasons Why SHIB’s Rising Funding Rate is Bullish:

• Positive Sentiment Shift: A funding rate increase reflects growing demand for long positions (bullish bets) relative to short positions (bearish bets).

The shift from a negative to positive funding rate in SHIB shows a significant sentiment change, as traders are now willing to pay a premium to hold their bullish positions.

• Reinforced Momentum: A rising funding rate during a price rally reinforces bullish momentum. As traders take on more leverage and pay higher rates to hold long positions, it signals greater conviction that SHIB will push higher.

In summary, growing divergence between spot purchases and futures market activity suggests traders are positioning themselves for a longer-term SHIB price rally., likely fueled by potential Federal Reserve rate cuts and improving macroeconomic conditions.

Growing divergence between spot purchases and futures market activity suggests traders are positioning themselves for a longer-term SHIB price rally.

SHIB Price Forecast: $0.000020 Breakout Ahead?

The combined growth in both OI and funding rates provides a backdrop for Shiba Inu price to maintain its upward momentum, potentially driving the price toward the $0.000020 resistance level in the coming days.

Shiba Inu Technical Analysis

Shiba Inu’s recent price action shows solid bullish momentum, as indicated by the technical indicators and chart patterns. Currently, SHIB is trading around the $0.00001843 mark, following a 20% surge over the last four days, signifying strong bullish sentiment.

The Relative Strength Index (RSI) reading of 63.11 highlights that SHIB is approaching overbought territory but still has room to rally further before hitting any critical exhaustion points.

The first key SHIB price support level is located around $0.00001600, a level that previously provided a solid base during the recent dip. The second support lies at $0.00001528, a longer-term support that coincides with the September lows and the Chande Kroll Stop (CKS) line on the chart.

On the resistance side, the primary level to watch is $0.00002028, representing a significant psychological barrier for SHIB. Breaking this level could signal a further leg up in the bullish cycle, potentially targeting the second resistance at $0.00002200.

The RSI’s proximity to overbought levels and the bullish crossover of the CKS indicator suggest that SHIB could see additional upside in the coming sessions, with traders eyeing the $0.000020 breakout as the next major move.