Shiba Inu Up 7%—But Overvaluation Signals Pullback

The price of Shiba Inu has gained 7% in the past 24 hours, breaking out of a multi-month downtrend that has caused significant losses for investors.

While this rally is promising, it may not be sustainable due to a significant development that could affect the asset’s price trend.

Shiba Inu Could Reverse

The Network Value to Transaction (NVT) ratio for Shiba Inu recently reached an 11-month high. This increase suggests that the network’s valuation is exceeding its transaction activity, and the asset is overvalued.

The increase in the NVT ratio raises concerns that SHIB’s current price may not be sustainable. When an asset is overvalued, it usually experiences a pullback during a market correction. This could prevent Shiba Inu from continuing its recent upward momentum.

Despite the overvaluation, Shiba Inu’s technical indicators are showing signs of bullish momentum. The Relative Strength Index (RSI) is moving into positive territory, having broken above the 50.0 neutral mark for the first time in over a month and a half. An RSI above 50.0 generally indicates increasing bullish strength and indicates improving market sentiment.

This change in momentum could help offset a potential price correction due to overvaluation. As the RSI continues to rise, it could provide the necessary impetus for SHIB to continue its upward movement and offset the negative pressure caused by overvaluation.

SHIB Price Must Find Support

The price of Shiba Inu has risen by 7% to $0.00001198. This upward move has seen SHIB break out of a two-month downtrend and signals a potential shift in market sentiment. However, this rally is facing resistance and it may be difficult to sustain the price gains due to concerns of overvaluation.

SHIB is currently testing the $0.00001188 level as potential support. However, this seems unlikely given the overvaluation and market sentiment factors. Depending on how the market adjusts, SHIB could stagnate between $0.00001188 and $0.00001141 or drop to $0.00001059.

If the bullish momentum continues and breaks through the overvaluation, SHIB’s price could rally towards the $0.00001252 resistance level. A breakout of this level could push SHIB towards the $0.00001344 level, invalidating the bearish thesis and potentially extending the uptrend.