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Why Shiba Inu Surged Today

By Joe Tenebruso – Dec 22, 2021 at 6:26PM

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Whales are buying. Should you?

What happened

The cryptocurrency Shiba Inu (SHIB -1.41%) climbed on Wednesday, following reports of a massive purchase by a wealthy investor. As of 5:10 p.m. ET, Shiba Inu's token price was up more than 10% over the previous 24 hours.  

So what 

One digital wallet holder bought 4 trillion Shiba Inu tokens for a whopping $134 million, according to CoinDesk. The blockbuster purchase helped to halt the recent decline in the token's price. The digital currency had shed roughly two-thirds of its value after it skyrocketed to all-time highs in late October. 

A person is pointing to a keyboard button labeled buy.

Image source: Getty Images.

Following the rally, Shiba Inu stands as the 13th most-valuable cryptocurrency, with a total market value of nearly $20 billion, according to CoinMarketCap. It's positioned just behind Dogecoin (DOGE -1.57%), the original dog-inspired meme coin that Shiba Inu's community of ardent supporters seeks to overtake.

Now what

Shiba Inu's ascent has been stunning. Even with its tokens down sharply from their highs, the cryptocurrency has generated returns of more than 45,000,0000% in 2021. That's enough to turn relatively modest sums into staggering fortunes.

But should you buy today? That question presents investors with a very different risk-to-reward equation than what they faced earlier this year.

After its incredible rise, Shiba Inu's nearly $20 billion market value makes it far less likely to deliver exponential gains to investors from this point forward. At the same time, its steep climb earlier this year makes it more prone to violent pullbacks, as we've seen in recent weeks. Thus, investors should be much more cautious about buying Shiba Inu at current prices.

Joe Tenebruso has no position in any of the stocks or cryptocurrencies mentioned. The Motley Fool has no position in any of the stocks or cryptocurrencies mentioned. The Motley Fool has a disclosure policy.

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