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Shiba Inu Soars and Crashes, But It's Still Holding Up This Week

By Chris MacDonald – Dec 5, 2021 at 10:02AM

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Despite headwinds, this token is doggedly moving forward.

What happened

This week was a rather volatile one in crypto land. For meme token Shiba Inu (SHIB -0.14%), this was certainly the case. 

Most cryptocurrencies saw significant volatility last weekend, as a direct result of the plunge we saw across most risk assets Friday with the omicron variant being deemed a "variant of concern" by the World Health Organization. Since crypto markets are open 24/7, 365, Shiba Inu saw significant declines over the weekend, which were quickly erased on Monday.

Most risk assets traded higher in Monday's session, as the market rethought Friday's sell-off. For Shiba Inu, speculation about a new metaverse game helped send this token well above Friday's close.

Tuesday's price action for this meme token was much of the same, with Shiba Inu rising more than 30% at its daily highs. A listing on Kraken, a prominent crypto exchange, was the key catalyst that got investors excited.

For the remainder of the week, Shiba Inu did see some price pressure. However, SHIB tokens ended the week flat on a week over week basis, as of 9am ET.

Shiba Inu dog with tongue out.

Image source: Getty Images.

So what

More speculative risk assets such as Shiba Inu have begun to move in tighter correlation to riskier equities in recent months. For investors in meme tokens, the direction of capital flows into risk assets appears to matter more than before.

Right now, investors appear to remain somewhat uncertain as to the direction of momentum in the meme token space. Other high-momentum sectors of the crypto market (namely, metaverse-related cryptocurrencies) are generating a tremendous amount of attention. The degree to which these other momentum-driven segments of the crypto market temporarily or permanently divert investors' funds out of dog-inspired tokens remains to be seen.

Now what

Undoubtedly, Shiba Inu is among the riskiest assets in the market today. For most assets, this risk is reflected in volatility. Indeed,  Shiba Inu has been one heck of a volatile token this week, despite ending the week right around where the token started.

Long-term conservative investors with a focus on capital preservation and great risk-adjusted returns may want to stay as far away from this token as possible. This volatility is likely to persist.

That said, those who have held onto Shiba Inu through previous bouts of volatility really look like the intelligent investors today. That's the market we're in right now.

Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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