For more than 19 months, investors have enjoyed a historic stock market rally. Since hitting the pandemic bottom on March 23, 2020, the benchmark S&P 500 has gained more than 100%. For some context, the S&P 500 has averaged an annual total return (i.e., including dividends paid) of closer to 11% since the beginning of 1980.
But for investors in hot cryptocurrency Shiba Inu (SHIB -1.70%), a 100% gain wouldn't even more the needle.
Shiba Inu-inspired crypto coins have soared in 2021. Image source: Getty Images.
Shiba Inu racks up gains topping 17,000,000% in 15 months
Back on August 1, 2020, Shiba Inu made its debut and printed a trade of $0.00000000051 on its first day. But as recently as a week ago, SHIB tokens were trading hands for as much as $0.000088. It might be difficult to tell given all the zeroes, but this represents a gain of more than 17,000,000% in roughly 15 months.
How does any investment gain 17,000,000% in such a short time frame?
One reason is greater visibility. As Shiba Inu coin has risen the ranks, in terms of performance and market cap, a greater number of cryptocurrency exchanges have welcomed it for listing. In theory, the more exchanges listing SHIB, the greater the awareness of the token, and the more likely it is that the community will grow. As of Nov. 3, more than 872,000 wallets owned a stake in SHIB, according to CoinMarketCap.com.
Some credence needs to be given to ShibaSwap, as well. ShibaSwap is a decentralized exchange launched in July that allows investors to stake their coins and earn passive income. What's noteworthy is this process requires investors to hang onto their SHIB for longer periods of time.
Tesla Motors' (TSLA -3.40%) CEO Elon Musk is a key player in Shiba Inu's historic gain, too. Musk recently adopted a Shiba Inu-breed dog named Floki. Anytime he tweets about his dog or makes mention of the Japanese Shiba Inu dog breed via tweets or memes, investors have taken it as their cue to drive SHIB higher. This is far from the first time Musk has moved the cryptocurrency market with his tweets.
SHIB's two biggest catalysts can't support its monstrous run higher
Looking ahead, there are two standout catalysts that "hodlers" are counting on to "knock out another zero" and help SHIB march ever closer to hitting $0.01 per token. Unfortunately, neither catalyst can save Shiba Inu from an eventual tumble.
Image source: Getty Images.
1. Listing on Robinhood
The biggest catalyst looks to be a potential listing on online trading platform Robinhood (HOOD 3.37%), which went public earlier this year. Robinhood is especially popular with young investors, which happens to be the same group of folks enthusiastic about cryptocurrencies like Shiba Inu. In fact, a petition to list SHIB on Robinhood has gathered more than 450,000 signatures, as of earlier this week.
With Shiba Inu vaulting as high as ninth among all cryptocurrencies in market cap, and Robinhood boasting 18.9 million monthly active users, as of the third quarter, a listing on the platform would make sense.
The issue here is twofold. First, Robinhood has lost a lot of its luster with retail investors. In January, Robinhood was forced to scale back trading in a number of heavily short-sold stocks due to insufficient liquidity on its own end. Even with 18.9 million monthly active users, it's unclear how many would trade SHIB on the platform after numerous trading outages and the aforementioned January incident.
Secondly, precedence has shown that listing on a major exchange tends to be a "buy the rumor, sell the news" type of event. For example, there was a mountain of buzz surrounding Dogecoin's (DOGE -0.74%) listing on Coinbase in early June. Although volume spiked on June 1 and June 3 as Dogecoin was respectively listed on Coinbase Pro and Coinbase, it didn't take long for DOGE to give up its gains. Just seven weeks after its listing, Dogecoin was down around 60%.
We've seen similar reactions when new derivatives for Bitcoin (BTC 0.34%) are listed on Wall Street or the options markets. For Bitcoin, the more mainstream it becomes, in terms of derivative securities being listed, the easier it is for pessimists to bet against it.
The point being that SHIB listing on Robinhood is unlikely to provide any lasting pop.
Image source: Getty Images.
2. Elon Musk's tweets
The other big catalyst being leaned on is a steady diet of tweets from Elon Musk. Tesla's CEO has never shied away from sharing his opinion on cryptocurrency and regularly posts memes on the subject.
However, there are a mountain of issues with Musk's tweets driving SHIB's price higher. To start with, there's nothing tangible behind what Elon is tweeting. By this I mean a picture of his dog or a meme of a dog on the moon doesn't in any way improve Shiba Inu's use case or make its network more efficient. It might be amusing, but it holds no tangible value for the Shiba Inu community. As a reminder, SHIB has virtually no use outside of a cryptocurrency exchange.
To make matters worse, Elon Musk recently lifted the hood on his cryptocurrency portfolio, and SHIB isn't one of his holdings. However, chief rival Dogecoin is one of Musk's holdings. He's even mentioned via tweet that he's working with developers to improve Dogecoin's network. Thus, when Musk is posting photos of his dog of alluding to a Shiba Inu dog going to the moon, there is no tangible connection to Shiba Inu.
Furthermore, it's hard to overlook the fact that Musk has previously waffled on crypto. Earlier this year, he announced that Tesla would hold Bitcoin on its balance sheet and accept Bitcoin as payment for new vehicles. Just weeks after the launch of this new payment method, Musk pulled the plug, citing the negative environmental impacts that accompany Bitcoin mining. Today, Bitcoin appears to be back in Musk's good graces.
In other words, Shiba Inu hodlers shouldn't expect any wind in their sails from Elon Musk.
With history and utility not working in Shiba Inu's favor, substantial downside seems likely.
