Can Shiba Inu Ever Reach $1?

While the investment landscape is exceptionally volatile right now, most asset classes have performed well since the March 2020 pandemic floor. S&P 500 was 79% higher than the March 2020 low, as of the closing bell on May 10, 2022.

But a 79% gain would be peanuts for the cryptocurrency space. Notwithstanding Bitcoin The total value of digital currencies has bounced back more than 50% from its all-time high, and has grown nearly tenfold since its March 2020 low, from $141 billion to $1.4 trillion.

Although the major players of crypto, Bitcoin and Ethereumget a lot of credit for this nominal increase it’s coins like Shiba Inu (SHIB 5.16% which are responsible for attracting many new investors in the cryptocurrency arena.

Shiba Inu themed coins shot up in 2021. Image source: Getty Images.

Shiba Inu’s Great Year Attracted Many New Crypto Investors

If you’re wondering, “Why Shiba Inu?” the answer is simple. Last year, Shiba Inu delivered arguably the greatest annual return we will ever experience.

When the curtains opened in 2021, a single SHIB token could be purchased for $0.00000000073, according to CoinMarketCap.com. Less than 10 months later, on October 27, the same coins would switch hands at a record high of $0.00008841. It might be hard to tell with all these zeros, but by eliminating six zeros after the decimal point, SHIB hit an unfathomable 121,000,000%! In other words, if you had the luck, resources and patience to invest $1 in Shiba Inu at midnight on January 1, 2021, your position on October 27 was worth more than $1.2 million.

Taking into account a retracement to close out the year, Shiba Inu made a profit of about 46,000,000%. Keep in mind that the best performing stocks typically gain 1,000% or maybe a little bit more each year.

As I noted earlier, Shiba Inu’s historic gains were supported by the dynamics of the crypto market. By this I mean that certain crypto exchanges do not allow investors to short sell – that is, bet on a drop in a security’s price. There are also no options or futures contracts available for skeptics to bet against, with the exception of Bitcoin futures. In other words, there was an inherent buying bias that caused social media enthusiasm to take over.

A close-up of George Washington's portrait on a one dollar bill.

Image source: Getty Images.

A lot has to go right for SHIB to reach parity with the US dollar

But the big question in the minds of the nearly 1.15 million Shiba Inu holders is, “Can SHIB ever reach $1?” For some contexts, the token price at the time of writing is $0.0000163. This means that it would take an increase of 6,134.869% to reach the equivalent of one dollar. While that may seem like an impossible task, remember that last year SHIB won about 121,000,000% in less than 10 months.

Perhaps the most important factor that could eliminate Shiba Inu is the burning of coins. The idea behind the burning of coins is similar to publicly traded companies buying back their own shares to reduce the number of shares outstanding. When burning crypto coins, tokens are sent to a dead blockchain address, making those coins permanently inaccessible. The withdrawal of tokens should theoretically increase the value of the remaining coins.

Last year, Ethereum founder Vitalik Buterin burned over 410 trillion SHIB by sending them to a dead blockchain address. Buterin got half of SHIB’s 1 quadrillion tokens. This action removed 41% of Shiba Inu’s circulating stock. To reach $1, the vast majority of existing tokens would likely have to be burned.

Another critical factor for Shiba Inu’s long-term success is the upcoming launch of Layer-2 blockchain project Shibarium. As things stand, Shiba Inu is an ERC-20 token built on the Ethereum blockchain. While Ethereum is trusted and proven, its popularity leads to network congestion and exceptionally high transaction costs. The primary goal of Shibarium is to significantly reduce transaction costs.

Aside from making Shibarium SHIB a more palatable payment option for merchants, the goal of lowering transaction fees is to boost a crypto ecosystem where SHIB and other coins coming from the decentralized exchange ShibaSwap are used to transact. to ease. This includes selling digital plots (“Shiba Land”) in its own version of the metaverse, as well as developing non-fungible token (NFT)-based gaming. NFT and digital landfill sites cannot exist until the transaction costs are much lower.

The last part of the formula needed to make SHIB hit $1 is a social media push like we’ve never seen before. Shiba Inu owners should create a level of excitement and FOMO, that is the “fear of missing out”, to shame last year’s massive pressure.

A visibly concerned person looking on a tablet at a rapidly rising and then falling cryptograph.

Image source: Getty Images.

Will $1 Ever Be a Realistic Goal for Shiba Inu?

While social media message boards show a lot of optimism, the question we may have to ask ourselves is, “Is $1 ever an opportunity for SHIB?”

While you can never say never in the cryptocurrency arena, I suspect that Shiba Inu’s chances of reaching parity with the dollar on a percentage basis are even lower than its token price. There’s a laundry list of factors that make a $1 goal pretty much impossible.

For starters, a $1 target would imply a staggering $549 trillion market cap for Shiba Inu, based on the coin supply listed on CoinMarketCap. To put this in some perspective, the largest publicly traded company in the US is: Apple† The market cap is $2.5 trillion. In fact, gross domestic product for the entire world was estimated to be $94 trillion last year. A token price of $1 on SHIB assumes it’s worth almost six times all the economic activity on the planet, which makes no sense at all.

Another major problem for Shiba Inu is the lack of differentiation and competitive advantages. While you could argue that its social media presence is a temporary competitive advantage, the fact remains that Shiba Inu is nothing more than a payment coin tethered to the Ethereum network. There are thousands of digital currencies that can act as payment coins, which will make it difficult for Shiba Inu to stand out in the long run.

There is also no clear path to relevance in NFT gaming. With Shibarium still being tested privately, other projects are launching NFT-based games well before Shiba Inu. In addition, interest in NFTs has fallen sharply. According to Google Trends, search interest in the term NFT has decreased by 75% in just four months.

Burning coins presents another challenge. Even if companies that accept SHIB burn a small percentage of what they receive, and the community supports the burning of coins, it will cost a dent to make an estimated 549 trillion tokens. all long time.

The final straw is that history doesn’t favor high-flying pay coins. When I examined the performance of pay coins and protocol tokens that yielded life-changing short-term gains, I found that virtually all recovered 93% or more of their value in less than 26 months. I can only imagine how far Shiba Inu could fall after returning a whopping 121,000,000% yoy in 2021.

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