Mark Twain is commonly credited with saying, "The reports of my death are greatly exaggerated." His actual wording was slightly different, but the quote reflects the famous writer's perspective when told about rumors that he was dying.
This line comes to mind when I see headlines about Shiba Inu's (SHIB 1.11%) supposed imminent demise. My view is that these predictions are greatly exaggerated.
To be clear, I'm not a Shiba Inu bull. I certainly don't think the digital token will be able to deliver anywhere close to the kinds of gains going forward that it has over the past year. And I wouldn't be surprised at all if Shiba Inu continues the general decline that started a few months ago. My take is that there are other cryptocurrencies that are likely to be much bigger winners than Shiba Inu.
But I also wouldn't be shocked one bit if the cryptocurrency delivers a solid return in the new year. Here are four compelling reasons not to write off Shiba Inu in 2022.
Image source: Getty Images.
1. Overall cryptocurrency momentum
You've no doubt heard the old expression, "A rising tide lifts all boats." I think that adage applies to cryptocurrencies for the most part.
My view is that the biggest risk to Shiba Inu is that there will be a broad and extended sell-off of cryptocurrencies in the coming months. No, I'm not predicting that this will happen. I'm just saying that it could.
On the other hand, I suspect that if the overall positive momentum for cryptocurrencies continues, Shiba Inu will deliver at least reasonably attractive returns in 2022. It still ranks No. 13 among the largest cryptocurrencies based on market cap. It still has an enthusiastic and vocal group of supporters. Good news for the cryptocurrency market as a whole should be good news for Shiba Inu.
2. Major improvements on the way
Shiba Inu's fortunes are especially intertwined with what happens with Ethereum (ETH 0.70%). Like quite a few other top cryptocurrencies, Shiba Inu is built on top of the Ethereum blockchain.
The second phase of the Ethereum 2.0 upgrade is planned for 2022. At some point in the new year, the beacon chain that's already in place will merge with the Ethereum mainnet. This will convert the entire Ethereum network to a proof of stake (PoS) model.
With PoS in place, Ethereum's transaction speed will increase. Its transaction fees will be significantly reduced. Its network will also be more secure.
Even without the Ethereum 2.0 upgrade, though, significant improvements are on the way for Shiba Inu. The Shibarium layer 2 solution should address some of the same issues that the Ethereum 2.0 upgrade will. And Shibarium could launch before Ethereum 2.0 will.
3. Potential inclusion on Robinhood
Rumors have flown in recent days that Robinhood (HOOD +5.15%) could add Shiba Inu to its trading platform as soon as January 2022. Are these rumors true? I have no idea.
Yes, Robinhood executives have publicly downplayed how quickly they'll move in adding more digital coins to the platform. However, I think that it's quite possible that Robinhood will support Shiba Inu at some point in the near future. If and when that happens, it's a near certainty that the digital token will skyrocket.
Sure, there are several other exchanges where investors can buy Shiba Inu already. But Robinhood is highly popular with younger investors -- a key demographic for cryptocurrencies.
4. Broader merchant adoption
Perhaps the biggest knock against Shiba Inu is its lack of real-world utility. But that criticism isn't as valid now as it once was. If the cryptocurrency continues to gain broader merchant adoption, its price could increase.
There's already been a major development on this front. Last week, digital payments company Flexa announced that Shiba Inu tokens can be used anywhere within its network of merchants. That includes more than 40,000 stores in the U.S. I'd say that's compelling real-world utility.
Again, I'm not a Shiba Inu bull. However, with this significant increase in real-world utility combined with potential inclusion on Robinhood and major improvements on the way, I wouldn't bet against Shiba Inu as long as the overall cryptocurrency market remains strong.
