Shiba Inu (SHIB) Faces Pressure Amid Broader Market Recovery

Shiba Inu's recent price action has been less than stellar, even as the overall cryptocurrency market enjoys a recovery.

Despite a broader recovery in the cryptocurrency market, Shiba Inu (CRYPTO: SHIB) has faced difficulties in maintaining price momentum. Here's a closer look at the factors impacting SHIB's price and what might lie ahead for the token in February.

Shiba Inu's recent price action has been less than stellar. Trading at around $0.00001564, SHIB's price has dropped by over 34% from its recent monthly highs. This decline suggests that the token is facing strong resistance, despite the general bullish sentiment across the market.

Shiba Inu's price must hold above the current support at $0.000015 to continue moving towards the next potential upside target of $0.000020. (FX1 on TradingView)

This subdued price movement can be attributed to a number of factors. For one, the funding rate for SHIB futures contracts indicates neutral sentiment. Unlike other assets that are seeing a surge in demand for long positions, SHIB has failed to attract significant bullish interest. Traders appear cautious, waiting for clearer signals before committing to new positions.

Moreover, Shiba Inu's on-chain activity has been lackluster. Although the token's burn rate surged by an impressive 567%, this hasn't translated into substantial price action. Interestingly, large transactions involving SHIB have dropped by 61%, highlighting a reduction in whale activity, which has historically been a strong driver of price movements for the token.

Watch - SHIBA INU Technical Analysis

Whale behavior often plays a pivotal role in the price movements of tokens like Shiba Inu. The absence of significant whale transactions, coupled with the lack of major market catalysts, has contributed to a stunted price performance for SHIB. With reduced activity from larger investors, many are questioning whether Shiba Inu can break free from its current consolidation phase.

Shiba Inu's 50% drop in trading volume, mirroring Dogecoin's decline, suggests a potential market-wide slowdown or waning investor interest. (Ayo Creator via X)

Investor sentiment in the token also remains complicated with recent controversies revolving around the leading team of the project. Taking this further, many accused the main developer, Shytoshi Kusama, of misleading the investors by lying about his involvement in different projects outside the Shiba Inu ecosystem in a manner detrimental to the future of the token.

Yet with all these controversies, Kusama has largely remained silent over the accusations, and at this moment, the Shiba Inu community is divided. While some there find the claims exaggerated, some are concerned that they might inhibit the long-term possibility with SHIB.

Shiba Inu's Partnership with the UAE: A Potential Game-Changer?

Amidst these difficulties, Shiba Inu secured a key deal with the Ministry of Energy and Infrastructure in the United Arab Emirates that may change the token's future. In this partnership, the government seeks to use ShibOS, which is Shiba Inu's blockchain-based operating system, in key sectors including energy and infrastructure. This marks the very first instance where a national government has embraced the blockchain at a federal level; this has, in fact, been one important milestone for the Shiba Inu project.

The UAE's Ministry of Energy and Infrastructure has partnered with Shiba Inu to advance blockchain innovation in infrastructure and sustainable energy. (Tech Valley via X)

The initial announcement saw a brief spike in SHIB's price, but the momentum quickly faded. Investors are likely waiting to see tangible developments from this partnership before making any major moves. The integration of blockchain technology into critical government services in the UAE could attract additional interest in Shiba Inu, potentially driving future price growth.

What Lies Ahead for SHIB This Month?

As February unfolds, Shiba Inu's prospects hinge on several key developments. The potential adoption of the Shibarium layer-2 network could be a game-changer if it gains traction, while further updates regarding ShibOS and the UAE partnership may bolster investor confidence.

For the token to break out of its current range, analysts believe it will need to see an increase in buying pressure. If SHIB momentum starts to kick in, the price could then look for resistance around $0.000018 for a potential uptrend toward erasing one zero and creating a path to $0.01. Conversely, if the bears continue to dominate, SHIB might retest support at $0.000012, signaling a possible downtrend.

Despite the challenges, the burning process continues to play an important role in Shiba Inu's ecosystem. Within the last few days alone, upwards of 18 million tokens were burned in a 48-hour timeframe and have thus reduced supply in circulation. Burns cannot alone drive the price surge for an asset, but they may present some possibility for long-term support.

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