Shiba Inu Follows Bitcoins Lead: 0.75 Correlation Signals Strong Price Dependence
- Shiba Inus price is highly correlated (0.72) with Bitcoin, so BTCs price movement significantly influences SHIBs market trajectory.
- Whale activity picks up with $140.13 million worth of big SHIB transactions in the past week, which could affect price volatility.
- Retail interest, particularly from western markets, and seasonal decoupling trends have the potential to disrupt SHIBs typical correlation with BTC.
Popular memecoin Shiba Inu is showing a strong price correlation to the leading cryptocurrency, Bitcoin (BTC). On-chain data provided by IntoTheBlock displays a 0.75 correlation coefficient between the two crypto assets.
Hence, BTCs price action would greatly influence SHIBs price action too. However, it remains to be seen whether a BTC rally would cause SHIBs price to rise to a new peak price.
Shiba Inus Growing Dependence on Bitcoin
As is often the case, when BTC is on a bull run, altcoins (including Shiba Inu) usually experience increased capital inflows. Conversely, the same is true when BTC is downtrending, it drags altcoins, such as SHIB, down with it.
Meanwhile, this correlation is occurring when BTC is still exchanging within its very crucial support and resistance levels. At the time of writing, BTC is trading at around the $91,650 level (short-term holders realized price). But a breakout above this level can trigger a rally among other cryptocurrencies.
Source: IntoTheBlock
Whale Activity, Decoupling, and Retail Interest Will Also Affect SHIBs Price
Though Shiba Inus price is strongly correlated with Bitcoin, its specific market dynamics add some variables to its price action. Data from IntoTheBlock also reported higher whale activity since there were $140.13 million worth of transactions involving large holders of SHIB last week.
With 74% of the circulating supply of SHIB meme coin in their pockets, their trading activities could cause relatively extreme price movements for SHIB. In addition, retail interest is a huge factor; for instance, the Western markets contribute to 51% of transactions.
The combination of retail and institutional interests could amplify the price movement driven by Bitcoin. Possible decoupling during meme coin seasons and changes in whale accumulation patterns are other factors that could further influence Shiba Inus price direction.
Despite the strong BTC correlation, historical data shows that SHIB usually breaks from BTCs price direction during periods of strong retail interest or speculation. Hence, investors must continue to monitor BTCs price charts and SHIBs on-chain metrics at the same time.
However, it is important to observe that current market conditions indicate that the price action of BTC will be an important factor in predicting the direction of SHIBs price.
Read more: https://www.tronweekly.com/shiba-inu-price-bitcoin-correlation/
Text source: TronWeekly
