Dogecoin vs Shiba Inu: Which Memecoin Will Lose Big When Selling Wave Hits?

In the volatile world of cryptocurrency, memecoins like Dogecoin (DOGE) and Shiba Inu (SHIB) are often subject to intense scrutiny and market fluctuations. Recent trends indicate that both coins are facing substantial selling pressure. This article delves into the comparative performance of DOGE and SHIB, examining market sentiment, key metrics, and potential future impacts on these digital assets.

Market Performance and Sentiment

Recent Declines

Dogecoin and Shiba Inu have both experienced significant declines over the past week, with DOGE down by 11.4% and SHIB by 8.5%. Despite these losses, both coins managed to recover slightly, gaining just over 10% in the past 36 hours. However, these gains are overshadowed by the broader downtrend in the market, influenced by Bitcoin’s struggles to stay above the $60,000 mark.

Open Interest and Funding Rates

Analyzing the futures market provides insights into market sentiment:

• Dogecoin: DOGE’s open interest declined mostly in the latter half of April. However, its price bounce in late March was more substantial compared to SHIB, indicating a stronger short-term bullish sentiment.
• Shiba Inu: SHIB’s open interest has been on a steady decline since early March, reflecting a consistent lack of bullish conviction. Short-term price bounces have seen quick reversals, pushing more market participants to the sidelines.

Comparative Analysis: DOGE vs SHIB

Speculator Sentiment

Speculators seem more inclined to short SHIB than DOGE, reinforcing the bearish sentiment for Shiba Inu. The funding rate for SHIB has been negative for several consecutive days, particularly from mid to late April and early May. In contrast, DOGE has seen minor negative funding rates for a few days in the past two weeks.

Market Value to Realized Value (MVRV) Ratio

The 365-day MVRV ratio, which measures the average profit or loss of all addresses that acquired coins in the past year, shows that both DOGE and SHIB have relatively healthy metrics. Dogecoin’s MVRV stands at 25.58%, while Shiba Inu’s is slightly higher at 28.84%. This suggests that despite recent losses, long-term holders of both memecoins are still in profit.

Potential for Future Losses

Given the current market conditions, it’s likely that both DOGE and SHIB will continue to experience selling pressure. However, SHIB appears more vulnerable to larger losses due to its prolonged bearish sentiment and weaker recovery potential. DOGE, with its stronger short-term rebounds and slightly more positive market sentiment, might fare better in the face of continued market downturns.

Strategic Considerations for Investors

Investors should consider the following strategies to navigate the current market conditions:

• Monitor Market Sentiment: Keep a close watch on funding rates and open interest metrics to gauge market sentiment and potential price movements.
• Diversify Investments: Spreading investments across different cryptocurrencies can mitigate risks associated with holding a single asset during volatile periods.
• Implement Risk Management: Use stop-loss orders and set clear investment thresholds to protect against significant losses.

Conclusion

Dogecoin and Shiba Inu are both under significant selling pressure, with SHIB appearing more vulnerable to larger losses. By understanding key market metrics and sentiment indicators, investors can make informed decisions and navigate the volatility of these memecoins. Strategic risk management and diversification will be crucial for minimizing potential losses and capitalizing on any recovery opportunities in the cryptocurrency market.