The meme coin market has regained strength, with its total market cap climbing to $60.71 billion. Among the standout performers, Shiba Inu is gaining traction as bullish momentum builds. The token is showing signs of a potential rally, supported by a surging burn rate and increasing optimism in the derivatives sector.
Price Action Points to Bullish Divergence
On the daily chart, Shiba Inu recently attempted to break out from an inverted head-and-shoulders pattern. It crossed the neckline at the 23.60% Fibonacci retracement level of $0.00001390. However, it failed to sustain momentum above the 200-day EMA and the crucial $0.000017 resistance level.
Source: Tradingview
Following a 3-week slide, SHIB has declined nearly 18% and now trades at $0.00001319. Despite the drop, the past three days have shown modest recovery, hinting at a shift in momentum. Notably, Shiba Inu found support around $0.00001252 aligned with the bottom of the previous right-shoulder structure. The RSI now signals a hidden bullish divergence, increasing the likelihood of a rebound toward the $0.00001390 resistance level.
Moving Averages Pose Resistance
Despite the potential recovery, the token remains under pressure in the long term. The 50-, 100-, and 200-day EMAs continue to trend downward, underscoring a bearish structure. Immediate resistance stands at the 50-day EMA, which aligns with the neckline at $0.00001391. If SHIB fails to break above this zone, it may revisit the $0.00001252 support. In a worst-case scenario, a sharper correction could drive prices down to $0.00001066.
Related article: Shiba Inu Trading Volume Hits Alarming Lows: Is SHIB Headed for a Breakdown?
Over the last 24 hours, Shiba Inu’s burn rate spiked nearly 140%, with 39.49 million tokens permanently removed from circulation. Daily burns have become more consistent, with Monday alone seeing 1.57 million SHIB tokens burned. So far, roughly 410 trillion SHIB tokens have been burned from the initial supply, reducing inflationary pressure and boosting investor confidence.
Derivatives Market Confirms Bullish Bias
In the derivatives market, traders have turned increasingly optimistic. According to CoinGlass data, open interest climbed 2.69% to reach $162.97 million. The funding rate also rose to 0.0088%, indicating growing bullish sentiment.
SHIB Derivatives
Moreover, short liquidations totaled $71.15K over the past 24 hours, far exceeding the $15.59K in long liquidations. This imbalance reveals a stronger flush-out of bearish traders, often a precursor to upward price movement.
With a rising burn rate, positive RSI signals, and increasing long positions in the derivatives market, Shiba Inu appears poised for a bullish reversal. However, the token must first break above its immediate resistance zones to confirm a sustained rally.
