You might not realize it, but Wall Street has delivered historically impressive returns over the past 20 months. After losing a third of its value in about a month during the coronavirus crash, the benchmark S&P 500 has bounced back to gain more than 100%.

But for cryptocurrencies, a 100% gain is seemingly just another week at the office. Over the same stretch that the S&P 500 has delivered its strongest performance from a bear-market bottom on record, the aggregate value of digital currencies has grown about 19-fold to $2.66 trillion.

A Shiba Inu dog peering at something out of the corner of its eye.

Shiba Inu-themed coins are all the rage in 2021. Image source: Getty Images.

Shiba Inu gained as much as 121,000,000% in 2021

With crypto's "Big Two," Bitcoin and Ethereum, accounting for 62% of this $2.66 trillion in market value, it's no surprise they get a lot of credit for this massive move higher. However, meme-based coin Shiba Inu (CRYPTO:SHIB) has left these "blue-chip" cryptocurrencies, and frankly every other digital currency, in the rearview mirror in 2021.

When the curtain lifted on 2021, a single SHIB token could be purchased for (get the magnifying glass ready) $0.000000000073. Comparatively, by Oct. 27, those same SHIB coins were going for as much as $0.00008841. In going from 10 zeroes down to four, Shiba Inu generated a peak gain of 121,109,489% in under 10 months! Put another way, if you had the luck to buy at midnight on Jan. 1 and sell at the very peak on Oct. 27, you could have turned $0.83 into more than $1 million.

To add even more precedence to these gains, the total return for the S&P 500, including dividends, since the beginning of 1965 is shy of 30,000%. Shiba Inu has lapped the S&P 500 over 4,000 times in a matter of months.

A person holding a smartphone displaying a volatile crypto chart with buy and sell buttons above it.

Image source: Getty Images.

Making sense of SHIB's historic move higher

If you're wondering how such incredible gains are possible, the answer lies with a laundry list of factors.

Perhaps the biggest role in Shiba Inu's immense gains is the inherent buy bias found in most cryptocurrencies. While short-selling select digital currencies is possible with some crypto exchanges, cryptocurrencies not named Bitcoin typically don't have easily accessible tracking funds or options/derivatives. The point is this: It's really easy for big money to bet against the most visible cryptocurrencies, but difficult to short-sell most everything else, including Shiba Inu.

The psychologically driven fear of missing out looks to be playing a role, too. It's no secret that Bitcoin has returned as much as 8,000,000,000% between its July 2010 debut and recent all-time high. With the understanding that historic gains are possible, investors have been more than willing to chase big gains even higher.

The launch of decentralized exchange ShibaSwap is helping as well. ShibaSwap is improving liquidity for what has been, at times, a thinly traded cryptocurrency, and it allows hodlers to stake their coins to earn passive income. Staking should help lengthen the holding period of SHIB tokens.

The Shiba Inu community is also relishing its first major merchant win. Recently, movie theater chain AMC Entertainment (NYSE:AMC) announced that it would integrate SHIB into its crypto payment platform, with the function going live by sometime in the first quarter of 2022. This move came after AMC CEO Adam Aron posted a poll on Twitter to ask whether or not the movie chain should accept Shiba Inu coin. More than 87% of the 153,100 respondents were in favor of the move.

And yes, Elon Musk has influenced Shiba Inu, too. The world's richest person adopted a Shiba Inu-breed dog this year, and is known for tweeting out Shiba Inu-themed memes. Although a number of coins are inspired by the Japanese Shiba Inu dog breed, SHIB hodlers have taken their cues to buy from Musk's tweets (even though he has nothing to do with the development of Shiba Inu).

A visibly concerned person covering their face while holding a tablet displaying a plunging crypto chart.

Image source: Getty Images.

Shiba Inu has already lost 59%: How low can it go?

But for as good as Shiba Inu has been in 2021, the hottest cryptocurrency in the world looks to be losing its luster. Between an Oct. 27 peak of $0.00008841 and an intra-day swoon on Nov. 24 to $0.00003614, SHIB has lost as much as 59% of its value in four weeks. Despite delivering historic gains, the question has to be asked: How long can Shiba Inu go?

One of the biggest knocks against this popular digital currency is that it lacks anything that resembles a competitive edge. While Shiba Inu is abuzz on social media message boards, there's nothing unique that makes it a long-term winner. Since it's an ERC-20 token built on Ethereum's blockchain, it's tethered to the same high transaction fees and processing lags that occasionally accompany the Ethereum network.

To build on this point, the real-world utilization for Shiba Inu is particularly low. Recent updates from online business directory Cryptwerk, as of Nov. 25, show only 365 merchants worldwide as accepting SHIB for payment. That's nothing when you consider there are over 500 million entrepreneurs worldwide, including more than 32 million businesses in the United States. The data is pretty clear that businesses have no desire to accept SHIB as payment.

Shiba Inu's median hold time is also particularly low, although the launch of ShibaSwap has helped encourage longer hold periods. According to leading crypto exchange and ecosystem Coinbase Global, the median hold period for SHIB is only 27 days. With so many momentum-chasers having piled into this trade, momentum to the downside could sink this ship just as quickly as it rose.

Lastly, history has shown that life-altering gains in the crypto space are eventually met with mammoth pullbacks. It's not uncommon for digital currencies to lose 93% to 99% of their value after five-digit percentage gains in a short time frame. If this turns out to be the case, SHIB could fall all the way back to between $0.000006189 and $0.0000008841.

Make no mistake about it: SHIB offers significant downside, even after losing over half its value.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.