Shiba Inu (SHIB) has fallen sharply in a short period, giving up most of its recent gains. As buying sentiment cooled quickly after a short-term rally, the strain on investor confidence has grown.

BeInCrypto said on Tuesday that Shiba Inu showed a rebound trend earlier this month but failed to sustain the rise and turned lower. As losses widened, some holders moved to sell to protect remaining value, adding to downside pressure.

On-chain data also clearly show the shift in sentiment. About 140 trillion SHIB were in profit at the start of the year, but profitable supply dropped about 62 percent over the past week, leaving about 57 trillion SHIB still in profit. It shows how quickly profits disappeared once the correction began.

As more holders lose profitability, selling pressure tends to increase. Exchange net position change data show Shiba Inu inflows to exchanges are rising steadily. That suggests the accumulation phase has ended and shifted to distribution, or selling.

A rise in exchange balances alongside the price decline is also evident. In general, higher exchange balances mean the likelihood has increased that tokens will be liquidated in the market, implying additional downside risk. It shows investors are choosing exit strategies rather than waiting for a rebound.

Shiba Inu is trading around $0.00000857 and sits just above $0.00000836, seen as a key support level. Shiba Inu has fallen about 9.6 percent over the past week and entered a correction after briefly touching $0.00001000 intraday on Dec. 5.

If selling pressure continues, the support level is likely to be tested. A fall below $0.00000836 could break below the 50-day exponential moving average (EMA), leaving room for a further drop to $0.00000786.

If buying support holds the support level, a short-term rebound is also possible. If it rebounds from $0.00000836, Shiba Inu could try to recover to $0.00000898, and a break above that level could turn the 100-day moving average into support and ease the short-term bearish scenario.