Is SHIB on the Verge of a Breakout
On-chain data from Santiment showed that on October 5th, the intraday trading session saw the ShibaInu token hit a local price bottom.
This has given rise to the possibility that the second-largest meme token in the market might be poised for a price rally.
The possibility
The Age Consumed metric is one that has proven to be quite effective when it comes to timing local bottoms.
Essentially, this particular metric tracks the number of tokens that change addresses on a particular date, multiplied by the time since their last movement.
When there is usually a surge in this metric, it indicates that a specific number of tokens that had once been idle have started to change addresses.
This indicates that the behavior of long-term holders has experienced a strong and sudden shift. But, when there is a decline in this particular metric, long-held tokens are not traded and remain in the wallets.
Therefore, the metric is considered highly useful for tracking tokens’ bottoms, as long-term holders do not usually make swift movements when it comes to their dormant holdings.
Hence, when such a movement happens, it means that market conditions are likely to experience a major shift.
The data
According to data from Santiment, on October 5th, the Age Consumed of the SHIB token rose to 200.78 trillion, which makes it the highest daily value in the previous month.
The price of the altcoin ended the trading day at a value of $0.0000071 and has recorded an increase since then.
At publishing time, the ShibaInu token was changing hands at a value of $0.00000752, which was an increase in its price by 2% since October 5th.
The Network Profit and Loss (NPL) metric was another on-chain metric, which showed that the Dogecoin rival had reached a price bottom on October 5th.
It calculates the average loss or profit incurred on tokens that change addresses every day for determining the profit-taking periods or holder capitulation.
The data from Santiment shows that SHIB saw a drop in its NPL to -1.2 million on October 5thand the price of the altcoin started climbing soon after that.
Low demand
But, the daily distribution of the ShibaInu token remains higher than its accumulation amongst spot traders.
At the time of writing, some of the key momentum indicators of the SHIB token were below their neutral lines.
This included the Relative Strength Index (RSI), which was below the 50 mark at 43.70, while the Money Flow Index (MFI) was at 37.28.
Similarly, the ChaikinMoney Flow (CMF) had also fallen below the zero line. When this turns negative, it is considered a weakness because it highlights a liquidity exit.
