The recent severe market correction that impacted <b>Shiba Inu (SHIB)</b> appears to have stopped short of a full-blown catastrophe, according to key on-chain metrics. Analysis of investor behavior indicates that the period of intense selling pressure, primarily driven by <b>Short-Term Holders (STHs)</b>, has peaked, suggesting that the most vulnerable supply has been cleared from the market. This exhaustion of sellers is a critical component in forming a definitive market bottom.

The data suggests that while the correction was painful, it didn't devolve into the panic-fueled freefall characteristic of a deeper market capitulation, allowing SHIB to avoid the worst-case scenario.
<h2>Short-Term Holders Realize Losses</h2>
The recent price dip caused a significant percentage of short-term investors—those who acquired <a href="https://www.cryptoknowmics.com/news/shiba-inu-weekly-chart-sets-up-unprecedented-signal-golden-or-death-cross/">SHIB</a> in the last 155 days—to sell their holdings at a loss. On-chain metrics that track the net flow of profit and loss show a sharp spike in realized losses among this cohort. This kind of event is a counter-intuitive positive signal in market analysis: when STHs realize losses and exit their positions, it indicates that the asset's price is approaching its <b>cost basis</b> for the average investor, forming a natural floor.

This aggressive shedding of weak hands, or capitulation, clears the way for the remaining, high-conviction holders to stabilize the price action and begin the accumulation phase. The sharp, decisive nature of the recent sell-off suggests the worst of the short-term distribution may be complete.
<h2>Looking Ahead: Path to Recovery</h2>
While the immediate threat of a catastrophic drop has likely been averted, a sustained recovery for SHIB is dependent on several factors. The coin must establish and hold local support levels, converting former resistance into a reliable price floor. The next phase will require a significant influx of fresh buying power to overcome the heavy overhead supply created by those who bought at higher prices and are now looking to break even.

The ability of SHIB to bounce from this exhausted selling state will be a true test of its community and the growth potential of its ecosystem, particularly its Layer-2 solution, Shibarium. For now, the successful realization of losses by STHs has done the necessary groundwork, creating the fundamental conditions required for a potential long-term reversal.

Shiba Inu Capitulation Crisis Avoided: On-Chain Data Signals Market Floor

On-chain metrics suggest Shiba Inu's market capitulation crisis has been avoided, with short-term holders realizing losses, possibly signaling a bottom.

Shiba Inu Capitulation Crisis Avoided: On-Chain Data Signals Market Floor

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