What happened
Cryptocurrency Shiba Inu (SHIB 0.54%) soared on Sunday evening following a social-media shout-out from Tesla founder and CEO Elon Musk. As of noon EDT on Monday, tokens were up 9% over the previous 24 hours, according to CoinMarkCap.com. Trading volume was up a far more robust 200% over that same time period.
So what
At 6:20 p.m. on Sunday evening, Musk posted a picture of what appeared to be a rabbit holding a rocket-ship emoji. Cryptocurrency traders took this is a signal. Roughly 10 minutes after Musk's post, Shiba Inu tokens were trading 14% higher. As previously mentioned, trading volume surged, and approximately $3.8 billion in Shiba Inu has changed hands over the past 24 hours as of this writing.
Image source: Getty Images.
It appears Musk was aware of what his post did to move Shiba Inu tokens. Shortly after they started soaring, Musk posted his thoughts saying, "I've thought about and ... I'm not sorry for party rocking."
Now what
It's possible for Shiba Inu to be a long-term winner in the cryptocurrency space. However, I believe long-term investors should tread cautiously, because tokens are soaring today due to a short-term consideration. Celebrities can sometimes move the market, whether it's cryptocurrencies or stocks. And that sword cuts both ways -- a celebrity suddenly withdrawing support can cause prices to drop in the short term.
With stocks, analysts can also move the price per share with upgrades and downgrades. However, over time, stocks can overcome negative coverage by delivering positive business results. Likewise with cryptocurrencies -- if a cryptocurrency sees its adoption increase (and not just its trading volume), it's a strong candidate for delivering positive returns.
Today's news for Shiba Inu isn't about adoption. Therefore, I wouldn't be surprised to see it give back some of its recent gains in coming days and weeks. For long-term investors, I'd suggest focusing on things more substantial, ignoring day-to-day noise like this.
