The cryptocurrency Shiba Inu (SHIB) has caught the attention of retail investors in recent weeks due to its impressive price surge. The digital asset has gained 20% in value over the past seven days, riding the wave of the general cryptocurrency market recovery that began in January.
While the recent price surge of Shiba Inu is certainly noteworthy, a closer look at the asset's price performance reveals an interesting formation of bearish divergence between the Shiba Inu price and the Relative Strength Index (RSI). RSI divergence is a crucial technical analysis tool used to determine the strength of an asset's price trend. In this case, the formation of bearish divergence between the Shiba Inu price and RSI suggests that the asset's recent price surge may not be sustainable in the long run.
In a typical bullish scenario, an asset's price and RSI move in tandem, indicating a strong price trend. However, when the price of an asset continues to rise while the RSI starts to fall, it suggests that the price trend may be losing momentum, and that a potential price reversal could be on the horizon.
It is also worth noting that Shiba Inu's burn rate, which refers to the rate at which tokens are removed from circulation, has not changed dramatically following the price surge. This could suggest that the recent price spike is more of a speculative nature rather than a result of increased demand for the asset.
While Shiba Inu's recent price surge is certainly noteworthy, it is important to keep in mind the formation of the bearish divergence between the asset's price and RSI. This technical indicator, along with the asset's unchanging burn rate, suggests that the recent price surge may not be sustainable in the long run. As always, investors are encouraged to exercise caution and thoroughly research any asset before making an investment decision.