Crypto market analyst Lark Davis suggested Shiba Inu’s SHIB/USD massive rally could be a sign of “overheated markets,” as Bitcoin BTC/USD shed 6% of its value, dropping to $58,800 on Wednesday.
What Happened: In a video posted on his Youtube channel on Wednesday, Davis examined the potential effect that meme coins such as Shiba Inu had on the market structure of Bitcoin.
Bad dog! The broader #crypto market has always had a mixed relationship with coins like $doge and $shib https://t.co/pepzqkmxAT
— Lark Davis (@TheCryptoLark) October 26, 2021
Citing a report from Delphi Digital, the crypto analyst argued that when “dog coins” such as Shiba Inu and other Dogecoin DOGE/USD cryptocurrencies skyrocket, historical data indicates markets are overheated.
“In April, we saw massive dog coin pumps. In September, we saw another big dog coin pump,” he said, highlighting this period was followed by markets cooling off and deep de-leveraging.
“A lot of those people who went long at the top are going to start getting washed out as the price comes down,” he said.
The analyst pointed out that a significant amount of money has flowed into dog coins over the past few weeks.
On Wednesday, Shiba Inu had over $22 billion in daily trading volume, which was more than the combined trading volume of Solana SOL/USD, Cardano ADA/USD, Dogecoin and XRP XRP/USD.
Photo by Maxim Hopman on Unsplash
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