Shiba Inu at risk? Negative funding rates flash warning for SHIB bulls

The cryptocurrency market edges lower on Tuesday as Bitcoin and other major cryptocurrencies are underperforming.

SHIB, the native token of the Shiba Inu ecosystem, is also down by 1% and is trading at $0.0000065 on Tuesday after breaking out of its consolidation range last week.

Derivatives data are capping SHIB’s upside move, with the memecoin’s broader technical structure still supporting further upward rally. 

Traders are now observing SHIB to see if it can sustain its breakout momentum or extend its correction.

Derivatives metrics cap SHIB’s rally

Shiba Inu is underperforming on Tuesday after last week’s breakout rally, with derivatives data suggesting traders are becoming increasingly cautious on the meme coin’s short-term outlook. 

According to CoinGlass data, SHIB’s long-to-short ratio fell to 0.49, approaching its lowest level in more than a month.

A reading below one indicates bearish sentiment, as a larger share of traders are positioning for downside moves. 

In addition to this bearish outlook, SHIB’s OI-weighted funding rate turned negative at -0.0061% on Tuesday.

Negative funding rates typically indicate that short sellers are paying longs, reflecting growing bearish pressure in perpetual futures markets. 

The combination of declining bullish positioning and negative funding rates is limiting SHIB’s upside momentum despite the token’s recent breakout. 

Shiba Inu price outlook: SHIB breaks above the consolidation range

The SHIB/USD 4-hour chart remains bearish despite last week’s breakout rally.

However, Shiba Inu found support near its 100-day Exponential Moving Average (EMA) around $0.0000064 on Monday before stabilizing near $0.0000065 during Tuesday’s session. 

Currently, the technical outlook remains constructive as SHIB broke above the upper consolidation boundary at $0.0000063 after 58 days of accumulation and rose slightly the previous week.

If buyers successfully defend the 100-day EMA, SHIB could continue its recovery toward the next major resistance level at $0.0000068. 

The Relative Strength Index (RSI) on the 4-hour chart reads 60, above the neutral level of 50 and below the overbought threshold, indicating bullish momentum. 

Furthermore, the Moving Average Convergence Divergence (MACD) indicator on the same chart shows green histogram bars, supporting the positive outlook.

On the other hand, if SHIB faces a correction, it could find support at the upper consolidation boundary at $0.0000063.

An extended bearish condition could see SHIB retest the April 13 low of $0.00000573.

SHIB’s underperformance comes as the broader cryptocurrency market is slowing down following Sunday’s rally. 

Bitcoin briefly touched the $82,000 level but has now dropped below $81,000.

Traders are focusing on the upcoming CLARITY Act vote in the United States on Thursday as it could affect the broader crypto market.

Furthermore, the ongoing negotiations between Iran and the United States could also affect how SHIB and other major cryptocurrencies perform over the coming days and weeks.