Chasing its tail? Shiba Inu price tumbles today following 38% leap

Most cryptos have proven highly correlated to other risk assets.

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Shiba Inu dog lying on the floor.

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The Shiba Inu (CRYPTO: SHIB) price is sliding today.

The token is down 7% over the past 24 hours, currently trading for 0.0031 US cents.

This comes after the speculative altcoin – whose creators call it the 'Dogecoin killer' and also features a Shiba Inu dog as its mascot – surged 38% yesterday.

At the current price, Shiba Inu has a market cap of US$17.1 billion, making it the 14th biggest crypto in virtual circulation, according to data from CoinMarketCap.

Whether today's losses reflect short-term profit taking or longer-term pain for the crypto remains to be seen. The token is down 9% in 2022 and down 65% since hitting all-time highs on 28 October last year.

What drove yesterday's Shiba Inu price surge?

When you're talking about market caps in the US$17 billion range, a 38% daily gain is worth taking stock of.

As The Motley Fool reported yesterday, the Shiba Inu price surge followed "a weekend rally driven by news that fast-food chain Welly's will be partnering with the dog-inspired cryptocurrency."

Derivatives markets also look to have spurred on the price gains, where "forced liquidations cost traders nearly $10 million, this time on traders betting the price of SHIB would fall".

Commenting on the revived fortunes in the crypto markets over the past week, Sharat Chandra, VP of Research and Strategy at EarthID said (quoted by the Economic Times), "Crypto prices have mimicked the US stock rally and recovery in stocks have provided the tailwinds for crypto."

For some insight into yesterday's big leap in the Shiba Inu price, Ishan Arora, Partner at Tykhe Block Ventures, added, "Bitcoin and Ethereum both bouncing off the lows have again given investors confidence in other coins such as Shiba Inu which have also bounced off weeks of downtrend."

And Lindsey Bell, chief markets and money strategist at Ally Financial said (quoted by Bloomberg), "People are starting to feel a little more comfortable dipping their toes back into some of these riskier asset classes after the pullback."

Now what?

Bell cautioned that it wasn't all clear sailing ahead for cryptos and the Shiba Inu price, with plenty of uncertainty on the horizon. Among those, how fast and how high global central banks might set interest rates.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and recommends Bitcoin and Ethereum. The Motley Fool Australia owns and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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