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Shiba Inu’s ($SHIB) bullish price momentum finally came crashing down after a 3-day long 300% plus price rally. The altcoin was on the verge of breaking into the top-10 as its market cap reached $13.4 billion, however, the meme currency couldn’t break through the $0.000035 resistance. After facing rejection at $0.000035, the $SHIB price started to tumble fast and broke through the strong support zone of $0.000022 and currently trading at $0.0002178 with a 30% loss over the past 24-hours.
The next key support for $SHIB lies around $0.000020 and testing this could send it to levels before the current bullish rally for the altcoin began. It managed to surpass the likes of Litecoin and Chainlink and removed a zero from its price over the past three days.
While the recent price action of the altcoin was attributed to retail frenzy and Elon Musk’s tweet, but data shows that the derivative volume for $SHIB peaked to new highs indicating the market was overleveraged. $SHIB perpetual value swaps increased by 78X in the last three to four days as its volume hit an all-time-high (ATH) of $5 billion.
Did Overleveraged Markets Led to Shiba Inu’s Fall?
Overleveraged derivative markets often lead to market volatility and false price action, as higher purchase orders send the prices soaring, however, as traders start taking profit and liquidate their positions, the price momentum breaks, froth settle down and the value comes down to the real market valuation.
Something similar seems to have happened with the $SHIB token, where being a meme token has a strong community. Last Sunday when Musk tweeted a photo of Floki dog, the $SHIB community built momentum on top of it to trend the altcoin on social media creating hype around it. However, the hype seems to have been short-lived as $SHIB is looking to hold its position above $0.000021 at present. The altcoin would need another Elon Musk push to get back to the bullish ways.
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