SHIB Surges 8% Amid Meme Coin Rally, But Correction Risks Loom

The recent price action for Shiba Inu (SHIB) is not occurring in isolation. The primary driver appears to be a sector-wide revival of meme coins, as noted in the source analysis. Dogecoin (DOGE), the category leader, is up 10%, while other popular tokens like Bonk (BONK), Pepe (PEPE), Pudgy Penguins (PENGU), and Pump.fun (PUMP) have charted even more impressive daily gains. This collective momentum has lifted SHIB’s market capitalization to nearly $4.5 billion, reinforcing its position as the 35th-largest cryptocurrency.

Beyond the broader market trend, a specific supply-side mechanism is contributing to positive sentiment. Data indicates the SHIB burn initiative has dramatically accelerated, with almost 200 million tokens destroyed in the past seven days—a 533% increase from the week prior. Since the program’s introduction in 2022, over 410.7 trillion SHIB have been permanently removed from circulation. The theory behind this is straightforward: by systematically reducing the enormous circulating supply, currently around 585.2 trillion tokens, the asset becomes scarcer, which could support its valuation over the long term.

Adding a layer of technical optimism to the narrative, analyst Anup Dhungana highlighted on social media platform X that SHIB is currently retesting a key long-term support level. Historical patterns show that similar retests in 2021 and 2024 were followed by what Dhungana described as “explosive pumps.” This historical precedent provides a basis for some traders’ expectations that the current rally could have significant upside potential, positioning the recent gains as more than just a fleeting bounce.

The combination of sector-wide strength, active supply reduction, and a favorable technical setup creates a compelling bullish case. For investors and observers, these factors explain why SHIB has started the year on a positive note and why some analysts are watching for a more sustained upward move. The token’s ability to hold these gains, however, is now the critical question.

Despite the encouraging price action and bullish catalysts, several key indicators suggest SHIB is not yet out of the woods and could be vulnerable to a correction. The most immediate technical warning comes from the Relative Strength Index (RSI), a momentum oscillator. SHIB’s RSI has climbed above 70, a level traditionally considered overbought. This indicates the price has rallied too rapidly in a short period and often precedes a pullback as traders take profits.

Further caution is warranted by on-chain exchange flow data. Analysis shows that over the past week, inflows of SHIB to exchanges have surpassed outflows. This net positive exchange flow can signal that some investors are moving their tokens to trading platforms, potentially positioning for a sell-off. When combined with an overbought RSI, this metric strengthens the argument that selling pressure could emerge to cap or reverse the recent gains.

These factors paint a more nuanced picture than the headline price surge suggests. While the meme coin rally and burn rate provide fundamental and sentimental support, the technical and on-chain data introduce significant near-term risk. The scenario outlined by the source material suggests this could be a brief recovery, soon replaced by a renewed correction as the market digests the rapid ascent and assesses the sustainability of the current demand.