Shiba Inu (SHIB) Volume Falls 20%, Liquidity Crunch Coming?

The broader crypto market appears to be recovering, as evidenced by a 1.2% jump in the total market cap. However, the Shiba Inu (SHIB) trading volume plunged 24% within the past 24 hours, raising concerns about a possible liquidity crunch.

Sharp drop in Shiba Inu trading volume

According to CoinMarketCap data, Shiba Inu trading volume decreased by 20% over the past day to $130.3 million. Despite this fall, the SHIB price increased 1.4% within the same time frame to trade at $0.000006205.

The price of SHIB also rose 6.5% over the past week but declined slightly by 0.1% on the monthly charts.

Typically, when trading volume declines, it suggests reduced conviction from both retail and institutional players. However, a volume drop alone does not mean Shiba Inu is experiencing a liquidity crisis. Rather, it is more of a symptom of lower short-term interest or broader market calm.

Still, some analysts have tagged the drop in SHIB reserves on centralized exchanges as a liquidity risk. Since early March, traders have moved out more tokens from exchanges, signaling an increase in buying activities. 

As of March 4, only about 80.4 trillion SHIB sat on all exchanges. Large token holders were largely responsible for withdrawing large amounts of SHIB from crypto trading platforms. 

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Bullish Shiba Inu whale amid holder growth

Despite ongoing concerns about a potential liquidity crunch, Shiba Inu whales have demonstrated confidence. 

In just 48 hours, an anonymous wallet added 120 billion SHIB to its portfolio. At the time of the purchase, SHIB traded around $0.0000061 per token.

Arkham Intelligence revealed that the whale address holds a total of $12.6 million worth of crypto assets, with SHIB representing a large portion.

Another key update that reflects rising interest in SHIB is the growth of holders on a monthly basis. As of March 25, the total number of SHIB holders surged to 1,558,200. 

The growth has constituted between 8,500 and 12,000 new wallets per month. Analysts described the growth as steady since activity on them is slightly up, with wallets not idle.

According to technical analysis, SHIB has hit a local bottom following an 88% drop from its 2024 high. The meme coin has found a key support at $0.00000575 and resistance between $0.00000615 and $0.00000620. A possible breakout could see Shiba Inu jumping toward $0.0000063.