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Bulls may have just received one of the strongest on-chain signals for Shiba Inu in weeks.
Recent exchange flow data shows that during the past 24 hours, about 257.9 billion SHIB left exchange wallets, creating a sharply negative exchange netflow. This large withdrawal could greatly enhance the token's short-term prospects, even though SHIB's price action is still under pressure.
Netflow turns in favor of bulls
Exchange netflow calculates the difference between withdrawals and deposits. A significantly negative metric indicates that more tokens are leaving exchanges than are joining them. Instead of preparing assets for an instant sale, investors typically withdraw them for long-term storage or self-custody. The most recent reading for SHIB, which is approximately -257 billion tokens, indicates a significant decrease in easily accessible sell-side liquidity.
The timing is especially intriguing. SHIB recently finished breaking out of an ascending channel that had been forming since March on the price chart. The action caused the token to fall below a number of important support levels and head toward new annual lows. Consequently, the perception of the asset has turned overwhelmingly negative.
But the market is currently exhibiting the typical symptoms of seller fatigue. With the Relative Strength Index now at about 26, SHIB is clearly in oversold territory. In the past, readings below 30 frequently suggest that a relief rally may be on the horizon and that the selling momentum is becoming unsustainable.
The exchange reserve metric lends credence to this idea. Over the course of the last day, the total SHIB reserves held on exchanges decreased by 0.32%, indicating that coins are actively leaving trading platforms. The significant negative netflow reading was caused by exchange outflows exceeding inflows by a significant margin at the same time.
Shiba Inu bulls are in control
This does not ensure that the situation will change right away. SHIB is still trading below its 50-day, 100-day, and 200-day moving averages, which are all still declining. Any attempt at recovery will need to overcome resistance in the $0.0000053-$0.0000060 range because the overall trend is still bearish.
However, the combination of hundreds of billions of tokens exiting exchanges and extremely oversold momentum results in a far more positive setup than the chart by itself would indicate. In the upcoming sessions, SHIB may be set up for a relief rally if selling pressure keeps declining and exchange balances keep getting smaller.
The on-chain data shows that the supply available for immediate liquidation is getting noticeably smaller, but it is unclear whether that develops into a larger trend reversal.
U.Today Editorial Team
Dan Burgin
