Shiba Inu’s native SHIB token rose by nearly half its value in the past week as crypto markets investors showed irrational exuberance amid a brief relief rally among majors.
SHIB rose to the $0.000011 mark on Wednesday morning from the $0.0000074 level last weekend, posting a maximum gain of nearly 48% for investors, as per CoinGecko data. A large part of the jump came Tuesday amid a relief rally in bitcoin and other major cryptocurrencies.
The tokens fell to the $0.0000094 level at the time of writing as traders took profits amid a slowdown among majors.
Price-charts suggest support at $0.0000082 and resistance at $0.000011 in case of a further bounce. However, SHIB is down 89% from its lifetime high, which was reached in October last year. The token has a market capitalization of over $5.5 billion at press time.
SHIB now ranges between strong support and resistance levels. (TradingView)
Analysts said speculative frenzy drove SHIB prices instead of it being a strong, fundamental-driven move.
“Recency bias suggests to investors that a bottom has been formed with Bitcoin and Ethereum this past weekend and that the market may be poised for a short-term recovery,” said Edson Ayllon, product manager at dHEDGE, told CoinDesk in a Telegram message. “This kind of sentiment brings back confidence in speculators, which, because of the absence of utility, SHIB attracts speculation,” Ayllon added.
Kate Kurbanova, the co-founder of risk management platform Apostro, seconded the sentiment. “The reasons for Shiba Inu’s latest growth are somewhat hard to explain and come with no observable link,” she said.
“While retail investors might have been accumulating the token on optimism that Musk’s erratic tweet in the not-too-distant future will stir the growth of the digital asset, thus translating to gains in the long run,” Kurbanova stated.
Tesla (TSLA) CEO Elon Musk is an infamous dogecoin (DOGE) proponent and reiterated his liking for the memecoin earlier this week. “I keep supporting [d]ogecoin,” he said, as reported, adding the was continuing to buy the token.
Some of this week’s gains on SHIB came as developers behind the prominent memecoin ecosystem released a proposal last Sunday that suggested changes to how ecosystem token BONE was used on the ShibaSwap platform.
BONE, a governance token and the main token emitted as yield rewards, would be used as fees to perform an action on the upcoming Shibarium protocol, a layer 2 protocol atop Shiba Inu that would support native app deployment and development.
Meanwhile, Ripple founder Brad Garlinghouse put the speculative nature of memecoins like DOGE and SHIB in focus during an appearance at the Point Zero Forum in Switzerland on Wednesday.
"I have publicly said I think the vast majority of tokens will go away over a period of time, because I can't figure out the utility," Garlinghouse said. "There's some that were created a little bit as a circus rhetorical sarcastic. Dogecoin is a clear example of it was never designed with utility. The founders have left the project. It moves based on the tweets of Elon Musk."
"This is purely speculative. I don't think that's healthy for the crypto market," Garlinghouse added.
