The Shiba Inu (SHIB) crypto-currency has caught the attention of retail investors in recent weeks due to its impressive price. The digital asset has gained 20 percent in value over the past seven days, riding the wave of the overall crypto-currency market rally that began in January.
While the recent surge in the price of Shiba Inu is certainly noteworthy, a closer look at the asset’s price performance reveals an interesting bearish divergence formation between the price of Shiba Inu and the relative strength index (RSI). The RSI divergence is a crucial technical analysis tool used to determine the strength of an asset’s price trend. In this case, the formation of a bearish divergence between the price of Shiba Inu and the RSI suggests that the recent rise in the price of the asset may not be sustainable in the long run.
In a typical bullish scenario, the price and RSI of an asset move in tandem, indicating a strong price trend. However, when an asset’s price continues to rise while the RSI begins to fall, it suggests that the price trend may be losing momentum and a potential price reversal may be on the horizon.
It is also worth noting that Shiba Inu’s burn rate, which refers to the rate at which tokens are removed from circulation, did not change dramatically after the price spike. This may suggest that the recent price spike is more speculative in nature than the result of increased demand for the asset.
While the recent price surge in Shiba Inu is certainly noteworthy, it is important to keep in mind the formation of the bearish divergence between the asset’s price and the RSI. This technical indicator, along with the asset’s unchanged burn rate, suggests that the recent price surge may not be sustainable over the long term. As always, investors are advised to exercise caution and thoroughly research any asset before making an investment decision.