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Despite recent on-chain developments, Shiba Inu is currently trading in a challenging market environment, with price action still reflecting strong bearish pressure, with lower highs, frequent breakdowns from transient consolidation structures and a price position below all significant moving averages. Sellers continue to control the overall direction of the market, as evidenced by the failure of every recent attempt at recovery.
Supplies get thinner
The supply of SHIB tokens has fallen, with reports indicating that 337 billion were taken out of circulation in a single day. Large-scale token removal, in theory, can strengthen the structural foundation and promote long-term scarcity if demand stays the same or rises.
But the market’s current response points to caution. The price has not responded in a significant bullish way, even though there are fewer tokens in circulation. This emphasizes a crucial fact: unless broader market sentiment and buyer demand coincide, supply reduction alone seldom produces immediate upside. Strong technical resistance is still present above SHIB at the moment, and momentum indicators are still weak and near oversold territory.
From a structural perspective, SHIB recently broke out of a minor consolidation pattern before continuing to drift lower, which supports the notion that traders are using rebounds to sell positions rather than make aggressive purchases. Additionally, volume spikes during declines imply that reactive selling, rather than steady accumulation, continues to be the primary driver of volatility.
Liquidity problematic
What does this mean for the market? By indicating continued ecosystem activity and an attempt to increase scarcity, the token burn mechanism enhances the long-term narrative. However, trends and liquidity conditions have a greater short-term influence on market prices than isolated on-chain events.
The burn metric continues to be more of a background positive than a catalyst for an instant recovery until SHIB is able to recover adjacent resistance levels and set higher lows.
For the time being, SHIB is still in a stabilization phase, with on-chain improvements that are noticeable but insufficient to change the current bearish structure.
Dan Burgin
Vladislav Sopov
