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Shiba Inu (SHIB) Unexpected Drop Can Actually Save It

Fri, 08/25/2023 - 12:49
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Arman Shirinyan
Shiba Inu's plunge in trading volume can be surprisingly beneficial
Shiba Inu (SHIB) Unexpected Drop Can Actually Save It
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Shiba Inu (SHIB) has recently experienced an unexpected drop in both price and trading volume. While this may seem like a negative development at first glance, a closer analysis reveals that this drop might actually be a saving grace for the digital asset. Here's why.

As of the latest data, SHIB's price has seen a decline, moving away from its recent highs. The price drop has been accompanied by a decrease in trading volume, which is often considered a bearish signal. However, this reduction in trading volume might have a silver lining.

Shiba Inu
Source: TradingView

In a typical uptrend, a drop in trading volume can be a warning sign. It may indicate a lack of interest or confidence in the asset, leading to reduced buying pressure. However, in the case of SHIB, this drop in trading volume might actually be a positive development.

Here's the thesis: the reduction in trading volume means that there is less liquidity on the market. While this can be detrimental during an uptrend, it can turn positive if there is a sudden surge of buying power on the network.

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With less liquidity, it takes a smaller amount of buying power to move the price of SHIB upward. In other words, a sudden influx of buyers could have a more pronounced impact on the price, leading to sharper upward movement. This reduced liquidity can act as a catalyst, amplifying the effects of positive market sentiment or favorable news.

The current drop in SHIB's price and trading volume might be setting the stage for a potential turnaround. If the market conditions align and there is a resurgence of interest in SHIB, the reduced liquidity could fuel a rapid price increase.

However, this scenario is not without risk. The same reduced liquidity that can amplify upward movements can also exacerbate downward trends. A sudden sell-off could lead to a steeper decline, making the market more susceptible to volatility.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.