Shiba Inu’s Deflation Engine Sputters – Is This Dip Worth Buying?

Shiba Inu’s much-hyped deflationary mechanism hits a snag—just as retail traders start eyeing the 'discount.' Before you ape in, here’s what you’re not being told.

The meme coin’s burn rate stalls, leaving bagholders wondering if the 'deflationary' narrative was just another crypto marketing gimmick. Meanwhile, whales are probably already positioning for the next pump-and-dump—because in crypto, the house always wins.

Pro tip: If you’re still betting on a dog-themed token to outpace actual financial innovation, maybe reconsider your life choices.

Retail traffic rises as whales step back

On-chain data points to renewed retail participation

Because over the past seven days, New Addresses increased by 19.83%, Active Addresses ROSE by 9.41%, and Zero Balance Addresses surged by 29.38%. 

These figures reflect a renewed influx of users and higher address churn, typical signs of rising engagement. 

Source: IntoTheBlock

However, a breakdown of transaction sizes shows mixed sentiment.

While sub-$1 transactions soared by 238.46%, larger transactions fell drastically, with $1K–$10K down 66.52% and $10K–$100K dropping 74.56%. 

In effect, SHIB is becoming a retail-heavy trade again — but without whales, upside pressure remains muted.

SHIB holds at demand zone, but technicals show more room for…

SHIB is currently consolidating within a defined demand zone between $0.00001028 and $0.00001196. This range has historically attracted buying interest, offering potential support for a bounce. 

However, the price remains capped below a descending trendline, keeping the broader structure bearish.

The Relative Strength Index (RSI) hovers at 41, indicating weak momentum without entering oversold territory. 

Therefore, while SHIB isn’t in extreme conditions yet, the setup suggests it could still dip lower before any substantial recovery. 

Source: TradingView

Are Shiba Inu holders choosing to hold?

Market flows suggest shifting sentiment among SHIB holders.

The memecoin’s 7-day Exchange Inflows rose by 26.43%, indicating some traders are moving tokens in—potentially to sell. 

However, outflows increased by a much stronger 92.01%, nearly doubling the inflow rate. 

This sharp rise in withdrawals signals that a significant portion of holders prefer to self-custody their assets, often viewed as a bullish indicator of long-term conviction. 

When outflows notably outpace inflows, it tends to reduce immediate sell pressure and suggests investors are preparing to hold through volatility rather than exit positions.

Are bulls preparing a move? Funding flips positive as…

Derivatives metrics show cautious optimism.

SHIB’s Open Interest-Weighted Funding Rate turned slightly positive at 0.0048%, indicating a tilt toward long positioning. 

Traders appear to be gradually favoring upside exposure, though the conviction remains low. 

Meanwhile, Liquidation Heatmap on OKX highlights key liquidity pressure between $0.0000132 and $0.0000133, where many short positions are vulnerable. 

If bulls can force the price above this range, it could trigger a wave of short liquidations, fueling upward momentum. 

Conversely, dense clusters NEAR $0.00001208 could act as immediate support if the price dips.

Source: CoinGlass

Can SHIB’s deflation and network activity spark a breakout?

SHIB’s sudden burn surge, rising address activity, and dominant outflows all point toward growing investor conviction. 

However, the lack of whale participation and persistent downtrend structure remain key hurdles. Until SHIB breaks above the descending resistance and clears the $0.0000133 cluster, upside may stay limited. 

Still, the groundwork for a recovery appears to be forming, with retail momentum and reduced supply laying early bullish foundations.