Shiba Inu's open interest has taken a significant hit following a recent surge. Initially mirroring the coin's price rally, the open interest has now sharply declined, raising questions about its implications for the coin's value.
Coinglass data reveals a stark reality: the Shiba Inu open interest, which peaked on March 6 as the coin neared its previous all-time high, has since dwindled. Over the span of two weeks, the open interest plummeted from an all-time high of $135 million to a mere $80 million on March 18, marking a staggering decline of over 40%.
Open interest serves as a crucial metric, reflecting the total interest in a cryptocurrency at any given time. It signifies the sum of all futures and options contracts for the asset, including SHIB derivative products. Consequently, an increase in open interest typically signals bullish sentiment, while a decrease indicates bearishness, reflecting reduced demand for the asset.
Historical data suggests a correlation between declining open interest and downward price movements. This current downturn may spell trouble for Shiba Inu's price outlook, evidenced by the significant drop in SHIB's value over the weekend, albeit showing signs of recovery as the new week begins.
Comparisons with the 2021 market scenario reveal ominous parallels. Last year, when Shiba Inu's open interest peaked, both its open interest and price underwent substantial declines. If history repeats itself, SHIB's price might be heading towards a downturn.
It's crucial to note that while 2021 marked the end of a bull market cycle, the current cycle is still in its nascent stages. With heightened demand, there may be a cushion to soften the blow of a potential price crash, offering a glimmer of hope amid uncertain times.
SHIB price drops to $0.00002783 | Source: SHIBUSDT on Tradingview.com
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Bitcoinworld“I’m just a nonentity typing on a keyboard, I’m replaceable. I’m Ryoshi,” the Shiba Inucoin founder previously said.
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