- Shiba Inu and Bitcoin are negatively correlated, which means when one goes up, the other goes down.
- This is likely due to the launch of Shibarium, a new layer-2 solution for Shiba Inu.
- Shibarium has seen its market cap and number of transactions hit new all-time highs since its launch.
- The Shiba Inu burn rate has also skyrocketed, with nearly half a billion SHIB burned in the last week.
- Shiba Inu is currently in a descending triangle formation, and a breakout is likely in October.
Correlations are a normal part of the crypto market.
We see it all the time, between Bitcoin and altcoins. When one goes up, the other follows suit, and vice versa.
However, very rarely, two cryptocurrencies establish something similar, yet very different:
Two negatively correlated cryptocurrencies behave weirdly, in that when one goes up, the other sinks. And when one sinks, the other goes up.
This is happening currently, between Bitcoin and Shiba Inu.
Let’s take a look at some details, and see what this means for you as an investor, and for the prices of both of these cryptocurrencies.
Bitcoin And Shiba Inu Are Negatively Correlated: Here’s Proof
The chart below is one of Shiba Inu’s price (red) and Bitcoin’s price (green), superimposed over one another.
Notice how at key levels, when Bitcoin’s price is up, Shiba Inu’s price is down. And when Shiba Inu’s price is up, Bitcoin’s is down?
On-chain analytics firm IntoTheBlock, also shows that the 30-day correlation coefficient between the two assets has slipped to new lows as of late.
This metric basically measures how two assets move in relation to each other.
When the score is more than 1, it means that the two assets move in perfect sync, while a score of -1 indicates that they move in opposite directions.
And as it stands, Bitcoin and Shiba Inu’s correlation sits at a bizarre -0.24.
Why Is This Happening?
The short answer to this is… Shibarium.
Shiba Inu may be establishing a negative correlation to Bitcoin because of this new layer-2 solution that was launched less than a month ago.
Shibarium, since launch, has seen its market cap and number of transactions hit new all-time highs.
According to Shibarium scan, Shibarium now has a total transaction count of more than 3 million, a stable daily transaction score of 20,000 and more than 1.2 million wallet addresses.
The success of Shibarium, as well as a recent partnership with HSBC (as highlighted by this article), has brought an increasing number of Shiba Inu use cases.
As it turns out, SHIB is now being used to pay for goods and services at a growing pace and is now slowly decoupling from Bitcoin as a result.
Shiba Inu Burn Rate Skyrockets
According to a recent tweet from Shibburn, Shiba Inu has seen a total of 125 million $SHIB burned over the last 24 hours, in a 71% increase from the previous day.
Shibburn also reports that over the last week, almost a billion SHIB has been burned so far, with 292,842 $SHIB burned over the last hour.
This is significant, in that it shows the SHIB community’s dedication to reducing the circulating supply of SHIB, as a way to further help its price.
Here’s How It All Affects You In October
Shiba Inu continues to trade atop the $0.000007 support, with disappointingly low volatility.
According to the chart, we can see that SHIB is in a descending triangle, and the low volatility is caused by the memecoin being squeezed between the trendlines.
Interestingly enough, Bitcoin is also facing resistance around the $26,919 zone, as illustrated below.
Bitcoin’s price action is by the way.
In relation to the subject matter, Shiba Inu’s consolidation phase continues to push it further into a squeeze between its triangle formation, as illustrated below.
This means that regardless of how things go, we may indeed see a (likely bullish) breakout on one of these cryptocurrencies in October.
SHIB may break out of its 20-day EMA around $0.00000742.
The memecoin should be sufficiently bullish as long as it does not go below $0.000007.
In all, if a breakout from this 20-day moving average around $0.00000742 occurs, we may see a massive 50% price increase on SHIB as the memecoin becomes poised to hit $0.00001136 like it did on 12 August.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.