Shiba Inu (SHIB) has charted its way back into the top 20 cryptocurrencies based on market capitalization. This comeback comes as the dog-themed meme coin made a recovery from last week’s losses. It also comes at the backdrop of an Ethereum-fueled rally that saw meme coins pump.  

Nonetheless, despite reclaiming a spot in the top 20 cryptocurrencies, SHIB is flashing early warning signs. The fundamentals of this meme coin remain unmoved while the technical indicators paint a grim picture with the price of SHIB now looking fragile. 

Ethereum Rally Uplifts SHIB, But No Guarantee for Sustainability 

The recent surge in the price of ETH to as high as $3,835 has piqued interest for Ethereum-related tokens. Being an ERC-20 token with the largest market cap, SHIB has benefitted from this rally. Its surge in market cap has thus been prompted more by the strength of Ethereum, rather than by anything autonomous to the Shiba Inu ecosystem. 

Shiba Inu is currently ranked position 20 based on market capitalization, per CoinMarketCap. The SHIB meme coin flipped Toncoin to regain the spot.

However, the move is not justified by any new upgrade or a significant announcement by the SHIB development team. Instead, traders seem to be rolling money into the high-risk, high-reward assets as the crypto market turns warm again. 

SHIB, boasting an active community and meme-based popularity is one of the first to experience inflows during the ongoing capital rotation. This renders the current momentum of SHIB extremely reliant on the continued performance of Ethereum. Should ETH stagnate or reverse, SHIB is likely to follow suit soon – exposing investors to a dip once more.

SHIB Rebounds Off Demand Zone, But Resistance Looms

Shiba Inu’s latest move was sparked by a bounce off a significant demand zone which lies between $0.00001150 and $0.00001270. This region has served as an accumulation area since late June, with traders consistently buying dips around these levels. After briefly dipping into this zone last week, the price rebounded, indicating that buyers are still active and watching closely. 

The bounce pushed SHIB toward the $0.00001400 level, a psychological resistance that now appears to be acting as a support on lower timeframes. Technical traders are paying close attention to whether the price can hold above this threshold as a sign of strength.

If SHIB stabilizes above $0.00001400, the next logical upside target would be around $0.00001550, followed by the more critical $0.00001720 resistance area. Nonetheless, failure to hold the current price level could push SHIB down; back into the earlier demand zone. 

Shiba Inu’s MACD Signals Continuation of Bearish Momentum

As of this writing, Shiba Inu is trading at $0.00001397. While the price is showing resilience, the Moving Average Convergence Divergence (MACD) suggests an incoming bearish price action. At the moment, the MACD line is at 0.00000049, below the signal line which sits at 0.00000060. 

The histogram is also negative with the histogram bars deep red in color and bigger in size. For traders and investors, this shows further plunge may be lying ahead. Furthermore, it suggests that the rally that pushed SHIB’s market cap above Toncoin is only based on speculation and not long-term conviction. 

Shiba Inu may be back in the top 20, but that alone is not a vote of confidence. With key technical signals remaining weak and the momentum fading, traders must approach the meme coin’s recovery with caution.