Shiba Inu: Is $0.0001 a realistic year-end goal?
youUntil recently, the stock market was enjoying one of its strongest rebounds from a bear market low in history. It took a little over a year for the benchmark S&P500 double in value from its intraday pandemic low. But compared to the cryptocurrency space, equity gains look like peanuts.
Since the pandemic low of March 2020, the overall value of digital currencies has catapulted nearly $1.6 trillion, translating into a movement of over 1,100%. While Bitcoin and Ethereumwhich account for around 62% of the total value of the crypto market, are responsible for a significant portion of this increase in face value, these are lesser known coins like shiba inus (CRYPTO: SHIB) who have courted many new investors in the field of crypto.
Historic Shiba Inu Gain Has Drawn New Crypto Investors
If you are wondering, “Why Shiba Inu?” look no further than his jaw-dropping comeback last year.
When the bells rang at midnight on January 1, 2021, a single SHIB token could be purchased for a microscopic $0.000000000073. But in less than 10 months, those same coins would reach their all-time high of $0.00008841. By removing six zeros from its decimal point, SHIB achieved a peak intra-year gain of (drum roll) over 121,000,000%. In other words, investing $1 at midnight on January 1, 2021 would have made you a millionaire, starting from the peak of SHIB on October 27.
Even taking into account that Shiba Inu has sold off significantly through the end of 2021, we are unlikely to see an annual gain of around 46,000,000% again for an investable asset. Life-changing gains like this are more than enough to attract new investors.
Of course, Shiba Inu had help. For example, the dynamics of the crypto market helped the hitherto unknown token succeed. While it’s relatively easy to bet against stocks by shorting stocks and/or buying derivatives (like put options), those same tools may not exist in the cryptocurrency space. With the exception of Bitcoin, there are no derivative options that skeptics can use to bet against lesser-known digital currencies. Also, not all crypto exchanges allow short selling. All of this created a natural buying bias that Shiba Inu fully exploited.
Increased visibility didn’t hurt either. A number of crypto exchanges chose to list SHIB for trading last year. Coupled with the July launch of decentralized exchange ShibaSwap, it has created a scenario where exchange liquidity has improved dramatically in a very short period of time.
Can Shibarium and metaverse chatter push SHIB to $0.0001 by the end of 2022?
But according to Shiba Inu’s more than 1.14 million unique holders, their token could deliver a booster performance in 2022 (and beyond). While an additional 46,000,000% is not on the cards, a near quintuple in value to $0.0001 – SHIB tokens are changing hands at $0.00002064 at the time of this writing – could be expected by the end of this year.
The biggest catalyst in 2022 is the expected public launch of the in-house developed layer 2 blockchain project Shibarium.
Without getting too technical, Shiba Inu is a token built on the Ethereum blockchain. Although Ethereum is a highly reliable blockchain, being tethered to this popular network means having to deal with Ethereum’s high transaction fees and occasional processing delays. Shibarium’s goal is to drastically reduce transaction fees to make it more economical to use SHIB as a payment method.
As of now, no launch date has been set for Shibarium. However, it was reported earlier this year that Shibarium was undergoing its second round of private testing. It is still expected to be ready for its public debut around the middle of 2022, which is fast approaching.
Shibarium is the Shiba Inu’s key to ecosystem development. The project’s developers previously announced plans to create blockchain-based games and sell digital plots of land, known as “Shiba Lands,” in its own iteration of the metaverse. These Shiba Lands, as well as characters from blockchain-based games, will be stored as non-fungible tokens (NFTs). For an NFT marketplace to thrive, transaction fees need to be minimal – hence the importance of successfully launching Shibarium as soon as possible.
Considering that Shiba Inu was one of the most searched cryptocurrencies in the United States in 2021, a social media driven boost that causes SHIB to eat another zero cannot be ruled out.
Shiba Inu’s “Show Me” Moment May Disappoint
However – and that’s a pretty big “however” – virtually every sign and data point suggests that Shiba Inu’s chances of hitting $0.0001, let alone ending the year there, are extremely low.
The most glaring problem with Shiba Inu is that it does not stand out from thousands of other innovative cryptocurrency projects. As an ERC-20 token built on the Ethereum blockchain, SHIB is ultimately nothing more than a payment coin. It is surrounded in market value by other projects that offer smart contracts and the ability to develop decentralized financial and non-financial applications. Without any game-changing utility, it’s hard to imagine Shiba Inu remaining relevant in the long run.
As I’ve pointed out before, Shiba Inu isn’t even a particularly popular or prominent payment piece. The Cryptwerk online business directory lists only 659 merchants accepting SHIB for payment, and the vast majority of these merchants are obscure. Given Shiba Inu’s high transaction costs and increased volatility, it is unlikely that many merchants will be willing to accept it as a form of payment.
Another reason to be skeptical of Shiba Inu is the rapidly decreasing interest in NFTs and investments in the metaverse. Between mid-January and mid-April, Google Trends search interest in the term “NFT” declined by 65%. Not to be outdone, search interest in the term “metaverse” has dropped nearly 75% since late October. After the launch of Shibarium, chances are Shiba Inu’s game and metaverse plans will disappoint.
The nail in the coffin is a historic priority. With the exception of Bitcoin, life-changing gains among payout coins have resulted in equally epic pullbacks ranging from 93% to over 99% in the roughly two years since their respective peaks. With Shiba Inu gaining as much as 121,000,000% in 2021, a large and long downtrend is what to expect.
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Sean Williams has no position in the stocks mentioned. The Motley Fool has positions and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.