Arman Shirinyan
Shiba Inu is in a liquidity crisis and the situation is not changing yet
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Contents
- The Binance ecosystem is growing
- Cardano’s jump potential
Despite the volatile ripples in the crypto market, one of the most well-known meme coins, Shiba Inu (SHIB), is struggling to break a sustained uptrend. The main obstacle lies in the liquidity crisis, a low Total Value Locked (TVL) and unattractive APYs offered by liquidity pools, all of which point to a lack of demand for SHIB as an LP.
SHIB’s liquidity crisis is manifested in the limited volume of its tradable tokens. Without sufficient liquidity, the stability of the asset is at risk, deterring potential investors and causing current holders to reconsider their holdings. This stagnation is a major impediment to the upward momentum in SHIB prices.
Source: TradingView
Additionally, SHIB’s low TVL is another worrying factor. The TVL represents the total assets deployed in a cryptocurrency’s network or DeFi protocol. A low TVL indicates reduced activity on the network and is often interpreted as a lack of investor confidence in the asset’s return potential. This inactivity discourages new investors, thereby slowing SHIB’s price rise.
Finally, the disappointing APYs offered by various liquidity pools further exacerbate the problem. Since the yield is below average, there is no incentive for liquidity providers to engage SHIB in DeFi pools.
The Binance ecosystem is growing
Binance Coin (BNB), the native token of the Binance exchange and Binance Smart Chain, seems primed for an 11% rally after a notable spike in network growth.
BNB, which is currently trading at $312, a low not seen in the past 75 days, has been going through a relatively quiet period. However, a noticeable increase in network activity points to a possible trend reversal in the cryptocurrency. An increase in the number of provisioned and launched projects on the Binance Smart Chain (BSC) reinforces the strength of its native token.
The performance of BSC has always been directly related to the price development of BNB. Naturally, as more projects choose BSC for its efficiency and cost-effectiveness, the demand for BNB, which offers a strong backbone for its price, also increases. This phenomenon is even more pronounced in the DeFi sector, where BSC projects like PancakeSwap have dominated the market and taken BNB to new heights.
BSC’s rapid expansion is a testament to the adaptability and versatility of the Binance ecosystem. As the network continues to grow, it creates a thriving environment that can lead to a significant price spike for BNB.
Considering the current market conditions, a price increase of 11% could be on the horizon. Despite trading at a 75-day low, the Binance ecosystem’s growing strength could spark a bullish comeback. Traders and investors should keep a close eye on BNB’s movement in the coming days as a sudden change in trend could trigger a new rally.
Cardano’s jump potential
Recent technicals suggest that Cardano (ADA), one of the leading decentralized cryptocurrencies, is showing signs of curbing its recent downtrend. This comes after ADA successfully rebounded from the local trendline around $0.35 and subsequent movement gradually steered it higher. However, this possible trend reversal still lacks full market support, as evidenced by the ongoing declining trading volume.
In technical analysis, an asset’s movement points across important lines, such as B. the 50-day and 200-day EMA (Exponential Moving Average), often indicate a possible shift in the market trend. This is exactly what ADA achieved, breaking both EMA lines, suggesting a possible end to its local downtrend and a possible further rise.
But the declining trading volume that ADA is currently experiencing is acting as a countersignal. A healthy rally is usually supported by increasing volume, which means active investor participation and the market’s conviction of the ongoing trend.
The dynamics of market price and volume trends require careful monitoring as they provide important insights into possible future movements. In the case of ADA, caution is advised due to the discrepancy between price trends and trading volume.
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