The cryptocurrency Shiba Inu has recently drawn attention due to over $716 million in its exchange reserves, a figure that may initially alarm investors. However, a deeper analysis reveals that this headline number can be misleading.
On-chain data indicates a concerning situation for SHIB. The significant amount sitting on centralized exchanges raises questions about potential sell pressure and the absence of a solid bullish catalyst. The $716 million is calculated as a mark-to-market valuation, meaning it does not reflect the actual capital that could be liquidated without adversely impacting the market price.
When compared to similarly valued assets, Shiba Inu”s order books remain relatively thin. A substantial sell-off from these reserves could lead to a rapid decline in effective liquidity, which is estimated to be closer to $100-$200 million. Beyond this range, the price discovery process becomes chaotic, leading to severe slippage.
Despite a recent downturn, SHIB is attempting to stabilize its price. It has faced challenges breaking through significant resistance levels defined by mid- and long-term exponential moving averages (EMAs). While the asset has managed to recover from its local lows and briefly regain its short-term moving averages, this behavior is more indicative of relief buying rather than a confirmed trend reversal.
Momentum indicators currently show some strength in the short term, yet they fall short of signaling a long-term bullish trend. This caution is further supported by the metrics from exchanges, where tokens remain readily available for sale, indicating that reserves continue to trend upward. There has not been a noticeable shift in net flows, which typically signals accumulation or long-term holding behavior. Instead, current activities reflect more of an opportunistic trading approach.
Ultimately, while large exchange reserves like the $716 million in Shiba Inu are not necessarily bullish, they also do not spell doom for the token. This substantial figure potentially overstates the actual depth of SHIB”s market. The cryptocurrency remains structurally vulnerable until there is a significant reduction in reserves and the price consistently holds above critical moving averages with volume support.
