Traders use a number of different tools to identify alpha for their next trade. The price trends of one of the most popularly traded cryptocurrencies, Shiba Inu, can be better predicted by looking at its on-chain trading signals. Indicators such as the concentration of holders and average time holding the currency are a good start.
Shiba Inu is one of the most-traded cryptocurrencies. Some in the crypto space are against trading the assets altogether and use a buy-and-hold approach with the belief that in the long term the investment will go up. This sentiment is especially true for cryptocurrencies like Bitcoin and Ethereum. But, many other coins that lack the promise of blue chip cryptos are primarily used for short-term trading. Shiba Inu is a prime example of a coin that is largely used to speculate on its price more than anything else. If you looking to do this, it is best to be on top of the trading signals.
Benzinga dives into the on-chain data provided by intotheblock below.
Shiba Inu On-Chain Trading Signals Analysis
Holders Making Money at Current Prices
The Holders Making Money category displays the percentage of Shiba Inu holders that are positive on their buy, those who are neutral on their buy and those who are negative since their buy. This important category gives insight into how traders will act. The data here shows that the majority of Shiba Inu holders are down.
This category is interpreted differently depending on the circumstance. For instance, if holders are largely up, they could begin taking profits and selling. But holders could be largely in the red and sell if Shiba Inu is crashing or bearish. Thus, it is important to take a number of factors into your analysis.
Holder’s Composition by Time Held
The Holders Composition by Time Held shows the length that traders are holding the asset. In the Shiba Inu data, data is categorized by 1 year+ holders, 1-to-12 month holders and less-than-1-month holders. The longer the average hold time, the more bullish an asset tends to be. Shiba Inu shows that majority of holders are in the 1-to-12 month category.
Concentration by Large Holders
Traders who hold over 1% of a crypto asset are considered whales, which is what Concentration by Large Holders measures – the percent of the asset that whales hold. In Shiba Inu’s case, it is high. This bearish signal indicates that a smaller group of holders is more likely to dump their holdings all at once than if holding were more evenly distributed across a larger group of holders.
Exchange Inflows and Outflows
Exchange inflows and outflows are the amounts of a coin deposited into a wallet and the amounts of a coin withdrawn from a wallet. A higher number of coin withdrawals tends to be bearish.
While inflow and outflow are important factors to consider, it should also be understood that wallet withdrawals do not always mean that the coin is sold or burned. Traders may be moving their holdings around multiple wallets they own. A more worrisome sign as a holder would be to see little-to-no net inflows and outflows.
Is Now a Good Time to Buy Shiba Inu?
Whether you should buy SHIB now depends on your appetite for risk and your trading thesis. The crypto market has had bearish pressure on it over the last few months. An altcoin such as Shiba Inu tends to take the brunt of the blow from a crypto bear market, so it could be a painful trade to execute. However, short-term trades could be profitable, and a longer-term play could be right for you if you are a believer in Shiba Inu.
How do you Buy Shiba Inu?
Shiba Inu can be purchased on a number of exchanges. One notable platform that accepts SHIB trades is Robinhood. Another way to purchase Shiba Inu is through a non-custodial wallet. A popularly used non-custodial wallet is MetaMask, which can be added to your browser and grant you access to decentralized exchanges (DEXs). Shiba Inu has its own exchange called ShibaSwap.
On ShibaSwap you can do more than just trade. The DEX also lets users stake their tokens, interact with the decentralized autonomous organization (DAO) and trade non-fungible tokens (NFTs). The exchange is one of the more promising developments to come from the Shiba Inu community and could potentially lead to further utility.
How Does Shiba Inu Fit Into the Bigger Picture?
Shiba Inu will likely last as long as meme coins last. SHIB is largely drifting off the success of Dogecoin and will need DOGE to stay relevant as well. The meme coins may continue to fluctuate intensely – shooting upwards in bull markets and crashing in bear markets. Under this thesis, buying Shiba Inu in a crypto bear market could have a great upside.
The biggest risk with a long-term Shiba Inu investment is that these types of tokens (ERC-20) can be spun up very quickly, and nothing is stopping someone from creating a better meme and shilling Shiba Inu out of existence. The community alone is unlikely to make for a good investment. Any trades revolving around Shiba Inu should be considered a high-upside gamble rather than an investment.
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