After surging in popularity and value in 2021, meme cryptocurrency Shiba Inu has extended losses in 2021, with the token recording significant capital outflow.
Between January 1 and January 8, 2021, SHIB’s market capitalization has plunged by $3.5 billion from $18.68 billion to $15.16 billion (blue line in chart). In terms of Bitcoin, 24,027 BTC (yellow line in chart) exited Shiba Inu from 392,580 BTC to 368,553 BTC during the same period.
Drivers for SHIB’s volatility
Although the entire market is undergoing volatility, SHIB’s case might be due to large token holders taking profit with traders reducing their exposure to riskier assets.
Overall, SHIB’s current volatility was triggered by the activity of specific whales who appeared to be selling. For instance, at some point, a single whale moved $3 billion of the into different accounts spooking the markets.
Furthermore, although it is challenging to point the specific reason behind the SHIB volatility, the token appears to be a casualty of the general market crash.
The swings come amid a volatile period for financial markets characterized by rising inflation, forcing the Federal Reserve to tighten monetary policy. The move has threatened to reduce the liquidity tailwind that supported various assets.
What’s next for SHIB in 2022?
Despite the volatility, there is a sense of bullishness among fans of tokens such as SHIB, who expect the ‘Dogecoin killer’ to recover. It can be assumed that the bullish sentiments have emerged from SHIB’s other metrics that are considered positive.
For instance, as reported by Finbold earlier, SHIB continues to record interest from various quarters, with nine companies collaborating to burn a specific percentage of profits into the official SHIB burn wallet. The burn activity is geared towards sparking the token’s value.
