Shiba Inu, a prominent meme coin, has experienced a 20% decline in value over the past week. This notable decrease has rendered SHIB's market valuation attractive, as indicated by a key on-chain metric that points to potential undervaluation, presenting a possible buying opportunity.
However, despite the Market Value to Realized Value (MVRV) ratio signaling a potential entry point for investors, the downward trend for SHIB may not be fully realized yet.
A detailed analysis of SHIB’s MVRV ratio using a 30-day moving average confirms its current state of undervaluation, with Santiment’s data reporting a ratio of -29.35% at present.
The MVRV ratio is pivotal in assessing whether an asset is undervalued or overvalued by comparing its market value to its realized value. A negative MVRV ratio, such as SHIB’s, indicates that the market value has dipped below the realized value, suggesting potential undervaluation relative to the price paid by previous holders.
Historically, negative MVRV ratios can present a lucrative opportunity for investors seeking to buy assets at lower prices with plans to sell at higher values. Nonetheless, SHIB's ongoing bearish sentiment, including a negative funding rate of -0.03% as reported by Santiment, signals a potentially limited short-term recovery.
The funding rate pertains to the payments exchanged between long and short traders within perpetual futures markets. A negative rate implies that short positions are compensating long ones, which underscores bearish market sentiment as the anticipation leans toward further price declines.
Thus, while the negative MVRV ratio paints an optimistic picture for potential buyers of SHIB, the prevailing bearish outlook suggests the coin's bearish phase might not have concluded.
The daily chart for SHIB reveals further bearish sentiment through the Chaikin Money Flow (CMF), which currently registers a value of -0.03, underscoring strong selling pressure. The CMF is a key indicator of capital flow within an asset's market, with values below zero reflecting limited buying interest. Should the low demand for SHIB persist, the coin could face an additional price decline to $0.000014.
Conversely, any reduction in coin distribution might elevate SHIB’s price to $0.000016. The implications of these findings offer an intriguing landscape for future SHIB developments.
Disclaimer: The information provided in this article is for educational purposes only and should not be considered financial or legal advice. Always conduct your own research or consult a professional when dealing with cryptocurrency assets.