The Shiba Inu price has imploded this week, undoing all the gains it made earlier. It crashed to $0.00001870 as the crypto fear and greed index moved from the extreme greed zone to the neutral point. So, let’s explore why it is not ideal to sell the SHIB token now.
Shiba Inu price has formed a reversal candlestick pattern
A potential bullish sign for the Shiba Inu price is that it is slowly forming the highly bullish doji candlestick pattern. A doji is a pattern made up of a tiny body and long upper and lower shadows. It usually implies that an asset is opened and closed at the same price. This pattern often results in a strong bullish reversal.
At the same time, as we have written before, Shiba Inu has been forming a cup-and-handle chart pattern, a popular bullish sign. The ongoing retreat is likely part of the formation of the shoulder section of the pattern. Additionally, the SHIB price has found substantial support at the 200-day Exponential Moving Average.
Therefore, there are odds that the coin will bounce back in the coming days. If this happens, the initial target to watch will be the upper side of the cup at $0.0000326. A break above that level will raise the possibility of the SHIB price rising to the next important resistance point at $0.00004560.
However, the bullish view made by the doji candlestick will be invalidated if the coin falls below the key support at $0.00001870, its lower side. Such a move will lead to more downsides, such as $0.00001080, on the lower side of the cup.
Fundamental reasons not to sell
There are some fundamental reasons not to sell Shiba Inu as its price crashes. First, the coin’s burn rate is continuing, a move that is reducing the number of coins in circulation. This burn rate increased by over 45% on Thursday, even as the coin’s price crashed.
Second, there are odds that the Federal Reserve will deliver more interest rate cuts than the two promised on Wednesday. Data released on Friday showed that the headline personal consumption expenditure (PCE) retreated from 0.2% in October to 0.1% in November. The annualized rate moved from 2.3% to 2.4%, missing the expected rise to 2.5%.
These numbers mean that the Fed will likely deliver more cuts since inflation may hit its target rate earlier than expected. Such a move will benefit risky assets like Shiba Inu and technology stocks.
Further, Shiba Inu’s ecosystem is doing well. For example, Shibarium has completed over 675 million transactions, a figure that has continued to grow. This is notable since most of the fees generated in Shibarium are converted to SHIB and incinerated.
Read more: Why Did Crypto Crash? Time to Sell or Buy the Dip?
