The mainnet relaunch of Shibarium, a Layer-2 (L2) solution for the Shiba Inu [SHIB] ecosystem, on 24 August has sparked a price rally for one of its tokens, Bone ShibaSwap [BONE]. According to CoinMarketCap, BONE has gained almost 20% in the past seven days and was ranked as the top gainer among all cryptocurrencies at the time of writing.
Source: CoinMarketCap
The increased activity around BONE in the past few days was because some community members regained access to their previously bridged BONE tokens after Shibarium’s relaunch.
???? Exciting news from Shibarium (L2) update! ????
It’s officially live and running smoothly in private mode. The team just needs to make it public, and rest assured, all funds are safe! ????
Some people have already received their bridged $BONE #ShibariumUpdate #Shibarium pic.twitter.com/yk5L1ELMch
— ???????????????????? | Summer of Shibarium (@LucieSHIB) August 24, 2023
When the L2 network first went live on 16 August, it experienced scalability issues due to a massive transaction surge. Also, the bridge that allowed users to move tokens from other networks to the Shibarium network became faulty, causing many community members to lose access to their BONE tokens temporarily.
The Shibarium team halted public access to the network after discovering the bridge’s problem. They then fixed the issue, and relaunched the network on 24 August.
All bark, no bite
At press time, BONE exchanged hands at $1.38. Despite the rally, an assessment of price movements in the daily chart revealed that accumulation had slowed amongst daily traders.
A few negative divergences existed between BONE’s price and some key momentum indicators. For example, while BONE’s price climbed following Shibarium’s relaunch, its RSI and MFI trended downward. At press time, south-bound, the token’s RSI rested upon its 50-neutral line. Likewise, the MFI was positioned below its center line at 47.51 during the same period.
The divergence between price and indicators showed that the price increase was not supported by solid momentum. A price correction mostly follows situations such as this.
Further, its Chaikin Money Flow (CMF) returned a negative value of -0.22 at press time. While BONE’s price grew in the last week, its CMF plummeted and slipped into negative territory on 16 August, a position it has since maintained. This is a bearish signal, mostly interpreted as a sell signal amongst traders.
Source: BONE/USDT, TradingView
These price divergences suggested that once the hype sound Shibarium’s relaunch dies down in the coming days, and all previously-bridged BONE tokens have been retrieved, the alt’s price might suffer a significant negative correction.