Here's Why Shiba Inu Price Drop Could Trigger $50 Million Liquidation

Shiba Inu (SHIB) has seen a significant decline over the past week, causing negative sentiment among traders. This has led to strong selling pressure in the market.

However, if SHIB recovers, it could cause substantial losses for short sellers betting on the decline of this altcoin.

Shiba Inu Traders Should Pay Attention

The liquidation map shows an interesting development: if Shiba Inu recovers from the 10% loss, it could trigger over $52 million in short liquidations. Short sellers have bet on the price decline, but if SHIB recovers, these traders will face significant losses.

When traders exit their short positions due to losses, the market is likely to see an increase in buy orders, which could push SHIB's price higher. This scenario benefits SHIB holders, especially if the altcoin can recover, thus confirming the bullish price prospects for the token.

However, broader market signals show some concerns. The number of active addresses for Shiba Inu has decreased by 36% in the past 48 hours. This suggests that investors may be losing hope for a quick recovery of the altcoin and are rapidly exiting their positions.

The decrease in active addresses reflects a lack of confidence in the altcoin's short-term prospects. As more investors leave, the buying pressure needed to trigger a recovery becomes more difficult to build.

SHIB Price Needs to Overcome Resistance

At the time of writing, Shiba Inu's price is $0.00001407, just below the resistance level of $0.00001435. The altcoin is facing mixed signals, with both negative and positive factors affecting its price action.

The important resistance level of $0.00001435 needs to be broken for a potential recovery.

If SHIB continues to move within the consolidation range from $0.00001435 to $0.00001317, traders will be safe from liquidation risks. This sideways movement will keep the altcoin in a neutral zone, avoiding sudden price changes in the short term.

However, if Shiba Inu's price can break through the resistance at $0.00001435 and convert it to support, SHIB could climb back to $0.00001553. This would mark a 10% recovery, nullifying the current negative sentiment and shifting the outlook to a more optimistic tone.