While the second-largest meme coin has been mired in a prolonged downtrend for several months, analysts believe a significant price recovery might be on the horizon.

Several on-chain indicators bolster this optimistic view, though reduced activity on the Shibarium network suggests that bears remain active.

Could SHIB Experience a Surge?

As of now, SHIB is trading at approximately $0.000005653, reflecting a 52% decline in value over the past year, with a market cap around $3.3 billion, making it the 31st-largest cryptocurrency.

According to Twitter user Javon Marks, SHIB seems to be nearing a critical breaking point of another Falling Wedge pattern, which historically has led to impressive price gains. The last instance of such a breakout resulted in a staggering 455% rise, leaving many to wonder if a similar outcome is imminent.

Another observer, known as Crypto Legend, also highlighted the potential for SHIB to be a standout performer during the next altseason, with predictions suggesting gains as high as 10x.

Evidence pointing to a forthcoming price surge includes a notable decrease in the supply of tokens held on exchanges. Data from CryptoQuant indicates that this metric has plunged to a five-year low of approximately 80.1 trillion. This trend suggests investors are moving towards self-custody solutions, thereby reducing immediate selling pressures.

SHIB Exchange Supply, Source: CryptoQuant

Moreover, Shiba Inu’s Relative Strength Index (RSI), a technical indicator, has fallen to around 30 on a weekly basis, signaling that the asset may be entering oversold territory and poised for a rebound, although readings above 70 may suggest a pullback.

Potential Challenges Ahead?

In contrast to the optimistic forecasts, the SHIB burning mechanism and stagnation of Shibarium add some bearish clouds on the horizon. Currently, the burn rate has dropped by nearly 30%, resulting in fewer than 5 million tokens being sent to a null address daily.

SHIB Burn Rate, Source: shibburn.com

Since its implementation in 2022, approximately 410.75 trillion coins have been burned, leaving around 585.47 trillion in circulation. The plan aims to reduce SHIB’s supply and potentially increase prices as demand holds steady or grows.

Shibarium’s halted development also weighs heavily on the outlook. Although launched in summer 2023, this layer-2 scalability solution aimed to enhance the ecosystem by decreasing transaction fees and boosting performance. However, after suffering an exploit last year, investor confidence has wavered, and daily transactions have plummeted from the millions to just hundreds since the incident.