The meme coin sensation Shiba Inu (SHIB) has seen a sharp 10% price drop over the past 24 hours, triggered by a massive wave of profit-taking. On January 7, investors offloaded SHIB tokens worth $426 million—the largest single-day realized profit since February 2022. This selloff signals a shift in market sentiment and raises concerns about further downside pressure in the coming days.
But what exactly caused this sudden exodus? And where could SHIB’s price head next? Let’s break it down.
Understanding the $426 Million Selloff
The key metric behind this market movement is Network Realized Profit/Loss (NPL)—a powerful on-chain indicator that reveals whether investors are selling at a profit or a loss.
On January 7, Shiba Inu’s NPL spiked to $426 million, the highest it’s been in nearly three years. This means a large volume of SHIB tokens were moved from long-term wallets and sold at prices significantly above their last movement cost—locking in substantial gains for holders.
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When a large number of investors realize profits simultaneously, it floods the market with sell orders. If demand doesn’t match supply, prices inevitably fall. That’s exactly what we’re seeing with SHIB—increased selling pressure with limited buying interest to absorb it.
This trend is further confirmed by technical indicators like the Relative Strength Index (RSI), which currently sits at 41.96—below the neutral 50 threshold and trending downward.
What the RSI Tells Us
The RSI is a momentum oscillator that measures the speed and change of price movements. It helps traders identify overbought or oversold conditions:
- Above 70: Overbought → potential pullback
- Below 30: Oversold → possible rebound
- Between 30–70: Neutral to bearish/bullish depending on trend
With SHIB’s RSI at 41.96 and falling, the market shows increasing weakness. While not yet oversold, continued downward momentum could push the RSI toward the 30 level, indicating deeper corrections ahead.
Technical Outlook: Is More Downside Inevitable?
From a chart perspective, Shiba Inu has been trading within a descending parallel channel over the past 30 days. This bearish pattern consists of two parallel downtrend lines that connect a series of lower highs and lower lows—classic signs of sustained selling pressure.
As long as SHIB remains confined within this channel, the path of least resistance remains downward. Based on current trajectory, the next major support level could be around $0.000018.
However, technical patterns are not set in stone. A breakout above the upper boundary of the channel—driven by renewed buying interest or positive market catalysts—could invalidate the bearish structure.
In that scenario, SHIB might retest resistance levels at $0.000025**, with potential extension toward **$0.000033 if momentum builds.
But for now, the odds favor further downside unless we see clear signs of accumulation or reduced selling volume.
Key Support and Resistance Levels
- Immediate Support: $0.000018
- Strong Support: $0.000015
- Near-Term Resistance: $0.000025
- Upside Target: $0.000033
Traders should monitor these levels closely, especially volume trends and on-chain activity, to gauge whether the market is shifting from distribution to accumulation.
Why Are Investors Cashing Out Now?
Several factors may have contributed to this sudden wave of profit-taking:
- Long-Term Holder Exhaustion
Many SHIB holders have been sitting on unrealized gains for months or even years. With recent price stability and reduced volatility, now feels like an opportune time to lock in profits. - Broader Market Uncertainty
Despite occasional rallies, the overall crypto market remains in a consolidation phase. Macroeconomic concerns—including interest rate expectations and regulatory developments—have made investors cautious. - Lack of Major Catalysts
Unlike previous bull runs fueled by ecosystem developments or exchange listings, SHIB has seen limited news-driven momentum lately. Without strong narratives to sustain hype, profit-taking becomes more likely. - Meme Coin Rotation
Investor attention often shifts between meme coins (e.g., Dogecoin, PEPE, WIF). If newer projects attract capital inflows, older ones like SHIB may face outflows.
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Frequently Asked Questions (FAQ)
What caused the $426 million Shiba Inu selloff?
The selloff was primarily driven by long-term holders realizing profits after extended holding periods. On-chain data shows a spike in Network Realized Profit/Loss (NPL), indicating widespread selling at profitable prices.
Is Shiba Inu still a good investment?
That depends on your risk tolerance and investment horizon. While SHIB has strong community support and brand recognition, it lacks consistent fundamentals or revenue-generating use cases compared to other cryptos. Always do your own research before investing.
Can Shiba Inu recover from this decline?
Yes, recovery is possible if selling pressure subsides and new buying momentum emerges. A break above $0.000025 could signal bullish reversal potential, especially if supported by high trading volume or ecosystem updates.
How does NPL affect cryptocurrency prices?
Network Realized Profit/Loss measures how much profit or loss is being "realized" when coins are moved. A sharp rise in realized profit often precedes price drops, as it reflects mass selling activity from profitable holders.
What does a falling RSI mean for SHIB?
A declining RSI below 50 suggests weakening momentum and growing bearish sentiment. If it drops toward 30, SHIB may become oversold—potentially setting up for a short-term bounce, though not necessarily a sustained reversal.
Should I buy Shiba Inu during this dip?
Buying dips can be profitable, but timing the bottom is risky. Consider dollar-cost averaging or waiting for confirmation of trend reversal—such as rising volume on green candles or RSI stabilization above 40.
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Final Thoughts
The recent $426 million selloff in Shiba Inu highlights a critical phase in its market cycle: the transition from accumulation to distribution. While such pullbacks are normal in volatile markets, they serve as reminders that meme coins—despite their popularity—are highly speculative assets influenced more by sentiment than fundamentals.
For traders, monitoring on-chain metrics like NPL and technical tools like RSI can provide early warnings of trend changes. For investors, patience and disciplined risk management remain essential.
As always, stay informed, watch the data, and never invest more than you can afford to lose.
This article is for informational purposes only and does not constitute financial advice.