Shiba Inu, Sudden Plunge After Breakout...Crippled by 70% Overbought and Derivatives

▲ Shiba Inu (SHIB)

Shiba Inu (SHIB) showed strength by breaking through a major resistance line. However, a surge in open interest in the derivatives market slowed the upward pressure, leading to a temporary price correction.

Crypto media outlet FXStreet reported on May 12 (local time) that Shiba Inu's price rally stalled after its recent technical breakout due to resistance from the derivatives market. Shiba Inu had signaled a strong rally by breaking above a descending triangle pattern, but with the expansion of open interest, it lacks the momentum for further gains.

Overheating in the derivatives market is identified as a key factor putting downward pressure on Shiba Inu's price. As large leveraged positions are built up, speculative demand in the market is overwhelming spot buying, and the increase in open interest suggests that investors are considering profit-taking at current price levels. This structure carries the risk that a slight decline could lead to massive liquidations.

The Relative Strength Index (RSI), a technical auxiliary indicator, also warns of Shiba Inu's short-term overheating. Shiba Inu's RSI has remained above the 70 mark immediately after the breakout, indicating an overbought zone, suggesting that further downward correction may occur. According to data from on-chain analytics firm Santiment, the Market Value to Realized Value (MVRV) ratio also remains high, stimulating selling sentiment among market participants.

The market is watching whether Shiba Inu can successfully convert the resistance line it broke through into support, which will be key for its future direction. In crypto communities, including X (formerly Twitter), active discussions are underway about whether this price correction is a healthy adjustment or the beginning of a bear market. Large whale investors are showing a cautious attitude, observing market trends rather than accumulating more during the current correction phase.

Currently, Shiba Inu is facing a selling wall in the derivatives market, continuing a consolidation phase. Only when short-term price volatility eases and speculative positions are cleared can Shiba Inu begin its rebound towards the next resistance target of $0.000035. Investors are formulating future strategies by closely monitoring changes in trading volume and liquidity trends in the derivatives market.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*