Shiba Inu (SHIB) has been in the spotlight recently due to a remarkable surge in its token burn activity, which increased by a staggering 2532.14% over the past 24 hours. This surge is part of efforts to reduce the circulating supply of the cryptocurrency, which theoretically could drive its value upward due to scarcity. However, despite this significant increase in burn activity, Shiba Inu has continued to face downward price pressure, and its short-term future remains uncertain.

At the time of writing, Shiba Inu was trading at $0.00001469, showing a notable decline of 6.16% in the past 24 hours. The sharp drop in price is a clear indication that even such massive burn efforts have not been enough to reverse the current bearish sentiment in the market. While token burns are generally seen as a positive development, Shiba Inu’s price action suggests that other factors are contributing to the overall negative market outlook.

Technical analysis reveals that SHIB is currently in a critical price zone. On the charts, it appears to be forming a head and shoulders pattern, a classic technical signal that often indicates a reversal or continued downward movement. The price has recently been hovering around the critical support level of $0.0000147, which traders will be watching closely. A breakdown below this support could trigger a further price decline, potentially pushing SHIB toward the next support level of $0.00001261.

However, if the $0.0000147 support level holds firm, there may still be a chance for a price reversal. In such a scenario, SHIB could attempt to break past the resistance zone at $0.00001718, offering some hope for a recovery. Nonetheless, the current technical indicators lean more toward a bearish outlook, and much depends on whether the market can generate enough bullish momentum to shift the trend.

On-chain data further supports the bearish sentiment. The net growth of Shiba Inu’s network has been weak, with a modest increase of only 0.27% in the past week. This signals that adoption and activity around the token are not growing rapidly, which is crucial for sustaining price increases in the long run. Additionally, the “in the money” metric, which measures the profitability of holders, fell by 1.06%, suggesting that a large majority of SHIB holders are currently at a loss. This lack of profitability could discourage long-term investment, adding to the selling pressure.

Moreover, large transactions on the network have dropped by nearly 10%, signaling that institutional interest in Shiba Inu may be waning. Reduced institutional involvement in a token typically leads to a lack of large capital inflows, which are often needed to support upward price movement.

Further complicating matters, Shiba Inu’s liquidation heatmap highlights potential risks at key price levels. The map indicates that a significant number of liquidations have occurred around the $0.0000145 mark, increasing the chances of further price drops if the asset falls below this threshold. The liquidity risks, combined with the overall bearish market conditions, suggest that Shiba Inu may continue to struggle unless new positive catalysts emerge.

Despite the impressive token burn surge, Shiba Inu’s technical indicators, weak on-chain performance, and liquidation risks point toward continued downward pressure. While there is potential for a price reversal, SHIB’s recovery hinges on the ability to hold critical support levels and regain investor confidence. Without these changes, the bearish trend may persist, and Shiba Inu could face further declines in the near future.