Shiba Inu faces capitulation as 87% of holders are at a loss - What will happen next?

Since reaching its highest daily price of $0.0000176 on May 12, the top memecoin, Shiba Inu (SHIB), has experienced a fall of 33%.

Due to poor performance, on-chain data shows that the majority of SHIB holders are currently experiencing unrealized net losses, signaling a capitulation state in the market. What does this mean for investors?

SHIB bleeds as 87% of addresses are currently 'out of funds'

According to Glassnode, the Net Unrealized Profit/Loss (NUPL) data for SHIB indicates that this memecoin is in the capitulation zone.

The NUPL indicator of SHIB | Source: GlassnodeNUPL measures the difference between total profits and unrealized losses of all holders compared to market capitalization. It provides insights into whether the market is in a state of profit or loss.

According to Glassnode, market participants are capitulating when the NUPL of an asset is in negative territory. This occurs when total losses exceed gains, indicating that most holders are currently at a loss. It reflects a phase where investors are panic selling or holding tokens in a difficult situation.

The Global In/Out of the Money from IntoTheBlock confirms this bearish sentiment. Currently, the data shows that over 87.34% of SHIB holders are currently "out of money."

Global In/Out of the Money Indicator | Source: IntoTheBlockAn address is considered “out of money” when the current market price of the asset it holds is lower than the average purchase cost. This means that the holder will incur a loss if they sell the asset at market price.

SHIB holders surrender

In the past, the NUPL index being in negative territory marked the end of the bear market cycle. It often appears before the bottom and is followed by a recovery of an asset. This happens for two reasons.

First, when many holders are incurring losses, they often lack the motivation to sell. Instead, they choose to wait for a recovery to the breakeven point. This behavior reduces selling pressure, which can help stabilize the asset's price. When volatility decreases and prices begin to consolidate, it creates conditions that encourage buying SHIB and potentially push the price higher.

In addition, the initial stages of a downturn tend to eliminate "weak investors" while providing an opportunity for "diamond hands" ( long-term investors, who are more confident ) to participate in the market. These buyers accumulate during difficult market periods, bringing in capital that can support the price reversal.

Can SHIB regain the $0.000012 area?

Currently, SHIB is trading around $0.00001161. If selling pressure decreases and new buying activity appears, this memecoin could break through the immediate resistance level at $0.0000198. Breaking this barrier could push SHIB up to $0.00001362.

SHIB Price Analysis | Source: TradingViewHowever, if selling pressure intensifies and the fall continues, SHIB may drop to $0.00001105.

Adding to the short-term bearish outlook is the decreasing SHIB burn rate. In the past 24 hours, this rate has fallen by 92%. With fewer tokens being removed from circulation, the price of SHIB is unlikely to rebound without new demand.

SHIB Burn Rate | Source: Shib BurnIf the token burn activity does not recover soon, this could delay efforts to reclaim a higher price level for SHIB.

Vincent