One of the most popular meme coins is suffering from the current market. U.Today reported that Shiba Inu’s profitability has dropped to an abysmal 13%. In addition, the report notes that there is danger if it drops below 10%.
There is no underestimation of the prevalence of Shiba Inu, and its community, in the crypto industry, yet several factors have negatively impacted the new influx. While conditions are not yet unfavourable, there are indications that a continued decline could be tragic.
SHIB profitability can affect market value
Under normal circumstances, the profitability of an asset does not materially affect its market value. Since the context dictates the outcome of different circumstances, most investors will become more active when profitability rises to 90%. Conversely, they will invest more if holders see losses.
Conversely, there are thresholds that might indicate that the value of a digital asset would take a stronger hit. U.Today has indicated that recent data gathered on Shiba Inu’s profitability of 13% could have a negative impact on value.
The report writes, “as a large layer of investors will panic, especially ahead of big events like Christmas.” Adding: “Shiba Inu may not become an exclusion,” in the report. In addition, pointing to the sustained downtrend over the past 18 days provides insight into short-term investor sentiment.
In addition, a sustained decline could be the next action following a “chain of big sales that would push potential investors even further.” Still, the current prognosis is not set in stone. There are also cases where low profitability can be positive.
For some investors, low profitability “acts as a bullish factor that shows investors how profitable their potential holdings may be in the future.” Concluding that the metric sometimes “acts as an oversold/overbought indicator”. However, the complicated state of many meme coins makes their volatile nature difficult to sell in the current circumstances.