It's been an absolutely incredible year for Shiba Inu (CRYPTO:SHIB). The cryptocurrency may have started as something of a joke, but it's gone on to become one of the most explosive winners in investing history. 

Shiba Inu's cryptocurrency token is up a staggering 52,000,000% across 2021's trading. Even more striking, the token has posted those gains despite also trading down roughly 54% from its lifetime pricing high of $0.00008616 per token. With Shiba Inu trading down substantially from its previous record level and having already demonstrated that it's capable of posting explosive jumps, investors may be wondering whether it's time to buy the popular meme token. 

A smiling Shiba Inu dog.

Image source: Getty Images.

What is SHIB and how did we get here?

The overall cryptocurrency market remains incredibly volatile, and it's not unusual to see tokens post huge gains or losses on little or no relevant news. Like Dogecoin before it, the SHIB token exploded thanks to its ascendant meme status and continued to make gains thanks to comments and hints of support from Tesla and SpaceX CEO Elon Musk and other high-profile figures.

The token hit its all-time pricing high on Oct. 28, and it's since lost more than half of its value. Trading for most cryptocurrencies tends to be highly momentum-driven and move in cycles. Without a new surge of buyers or major new source of meme energy courtesy of Musk or other crypto market movers, SHIB mania has cooled off a bit. It's difficult to map where the token's price will head over the next six months, let alone beyond that time frame. 

Bears will raise the point that there really isn't much to distinguish SHIB from the legion of tokens that merely function as currencies and aren't connected to a broader application-building or service ecosystem. There are already more than 14,000 cryptocurrencies for investors to choose from, and new ones seem to be joining the fray all the time. 

However, many of the same critiques that are leveled at Shiba Inu can and have been levied against Bitcoin throughout its market-crushing rise. The cryptocurrency space is still something of a new frontier, and pricing moves are more volatile and harder to predict compared to most equities and assets.  

With the SHIB token generating lots of attention thanks to its big returns and favored status among highly risk-tolerant cryptocurrency investors, it's possible that Shiba Inu has solidified itself as a lasting name in the crypto space. It's also possible that the token will crash precipitously from current levels.  

SHIB looks extremely risky, but never say never

2021 has been a "never say never" year in the investing world. For speculative investments including Dogecoin, Bitcoin, GameStop, and AMC Entertainment, surging support from retail investors and a favorable economic backdrop created by low interest rates have helped shift the question from "why?" to "why not?" Some investors who took risky bets on seemingly unlikely winners went on to generate life-changing returns from their investments, and it's likely that we haven't seen the last of explosive meme plays. 

Shiba Inu now has a market capitalization of roughly $21.6 billion and ranks as the 13th-largest cryptocurrency by market cap. It continues to look like an incredibly risky investment. However, the same thing could have also been said at numerous points this year before the token went on its incredible rally. The risk profile has gone up as the cryptocurrency's token has made incredible gains, but SHIB also has name recognition and an enthusiastic community behind it. 

You should probably only invest in Shiba Inu if you have a very high risk tolerance or if you're just looking to toss some money into a gamble for fun. Conventional wisdom points to SHIB being a poor long-term investment, but conventional analysis also wouldn't have predicted the cryptocurrency's incredible rise this year, and it wouldn't be shocking to see the token bounce back significantly above current pricing levels. 

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.