Despite 3 Bullish Catalysts, Shiba Inu Declines More Than 4%


    What happened

    As of 9:30 a.m. ET Tuesday, meme token Shiba Inu (CRYPTO:SHIB) was down by 4.6% over the prior 24 hours. Investors appear to be pricing higher near-term interest rates and a flattening yield curve into higher-risk cryptocurrencies, as well as most “risk assets.” Also on Tuesday, the 5-year/30-year yield curve flattened to below 50 basis points for the first time since March 2020. 

    This macro-level de-risking has taken most difficult-to-value assets on a bearish ride. Unfortunately for Shiba Inu holders, these macroeconomic conditions are causing the market to discount three relatively bullish catalysts for the meme token.

    Shiba Inu puppy smiling.

    Image source: GETTY IMAGES.

    The aggregate number of users in the Shiba Inu network reportedly surpassed 1.14 million Monday. Additionally, Shiba Inu has once again ranked among the top 10 most-purchased crypto tokens by Ethereum whales, suggesting an impressive level of interest in it.

    One key driver of the bullish view various small and large investors are taking on Shiba Inu is the ongoing burning of SHIB tokens. It has been reported that more than 380 million SHIB tokens were burned over the past three days in a bid to boost the relative value of those that remain in circulation.

    So what

    An increase in the number of Shiba Inu holders, surging interest among whales, and a continuing token burn are all fundamental factors that would normally provide bullish momentum to this inflationary token. However, the macroeconomic and broad-market headwinds are simply overpowering the possibility of any sort of rally for it now.

    The reality remains that Shiba Inu’s fundamentals aren’t as easy to define as are those of most other risk assets. In the absence of real cash flows, crypto investors have been forced to come up with other metrics to use in their attempts to assess the appropriate valuation of Shiba Inu and its crypto peers. Currently, the market is looking past near-term catalysts toward longer-term headwinds that may remain strong for some time.

    Now what

    Meme tokens such as Shiba Inu exist on the “extreme risk” end of the risk spectrum. As risk-off sentiment takes hold among investors broadly, these tokens are likely to continue to experience downward momentum, at least in the near term. Indeed, this rising interest rate environment doesn’t bode well for most assets investors regard as something other than defensive.

    Those considering Shiba Inu as a near-term trade or an investment over a medium-term time frame need to be aware of these risks. The fact that this token has not maintained positive momentum for a multiweek period since Q4 may suggest that its price will continue to ebb, at least for the foreseeable future.

    This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.





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