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Shiba Inu (SHIB) Presents Buying Opportunity, Yet Rally Could Be Delayed
Shiba Inu (SHIB), the second most valuable meme coin, was not exempted from the market bloodbath that occurred on August 5. A few days later, the token bounced after initially hitting a five-month low.
This rebound sparked speculation of a notable price increase. However, SHIB has not lived up to that expectation despite flashing a sign that the current value could be a rare discount.
Shiba Inu At a Discount, Wants to Break Free
On-chain data from Santiment looked at Shiba Inu’s price DAA divergence.
The DAA in this metric stands for Daily Active Addresses, and it measures the rate of user participation on a blockchain. A rise in this metric increases the chance of price growth, while a decrease suggests otherwise.
When combined with the token’s value, the price DAA divergence offers insights into entry and exit signals. Typically, if the reading is negative, the price is growing faster than active addresses, which usually indicates a sell signal.
However, if the reading is positive, it means user participation is outpacing price growth, serving as a buy signal. At press time, SHIB’s price DAA is 12.17%, suggesting the latter and flashing a buying opportunity.
Likewise, the Market Value to Realized Value (MVRV) ratio also corroborates this bias.
This ratio uses the level of market profitability to determine whether a cryptocurrency is undervalued or overvalued relative to its fair value.
It also helps to spot tops and bottoms. Specifically, if the MVRV ratio is extremely high, holders have many unrealized profits, suggesting that they could be willing to sell. If this happens, it puts downward pressure on the price.
On the other hand, a low ratio suggests a low level of unrealized gains—sometimes, increased losses.
If this is the case, market participants will rather hold than sell, which could offer stability to the cryptocurrency price.
