You might have noticed online articles about how higher Shiba Inu (SHIB -1.71%) might go from here. No one knows the answer, of course, but speculating can be fun.
What's kind of strange, though, is the fixation on whether or not the altcoin will reach a price of $1. Spoiler alert: It won't. Not in 2022. Not in 2025. Not by the end of this decade. Probably not ever. And it doesn't matter one bit.
The mathematical realities
There's a lot of complicated underlying math with cryptocurrencies. Investors don't have to understand any of that math to buy Shiba Inu or any other digital coin. However, we need to bring math into the picture with the idea that Shiba Inu could go to $1.
Let's start with the percentage gain required. To reach $1, Shiba Inu would have to jump nearly 2,600,000%. That might not seem out of the question considering that the token already skyrocketed more than 50,000,000% over the last 12 months. And it was even higher before pulling back over the past several weeks.
But huge gains become much harder to achieve on top of huge gains. My Motley Fool colleague Sean Williams recently wrote about Shiba Inu's $589 trillion problem. Sean determined that the coin's market cap would be $589 trillion if it reaches a $1 price. As he correctly pointed out, that's a lot more than the $431 trillion or so total for all the wealth on the planet right now.
You might quibble with Sean's number. Shiba Inu's maximum supply is roughly 589.7 trillion coins, while its circulating supply is currently around 549 trillion coins. However, his point is spot on: A $1 price for Shiba Inu is effectively impossible.
I don't care in the slightest that Shiba Inu isn't going to $1. Neither should you. It truly doesn't matter.
Let's suppose that the digital token rises to $0.01 instead of $1 -- only 1% of the "goal." If you owned just $400 worth of Shiba Inu coins today, that level of increase would give you more than $103,000. No one is going to complain about that return.
There's a much more important question to ask than will Shiba Inu hit $1. What investors should really focus on is whether or not the coin is more likely to go up or to go down.
To be sure, attempting to answer this question involves major speculation. Your answer could be completely different than mine. But it's at least worth considering -- unlike the idea that Shiba Inu will reach $1.
A guessing game
Shiba Inu's future fortunes depend almost entirely on the demand for the digital coin. Without rising demand, Shiba Inu sinks. With rising demand, it could soar.
Why might the demand for Shiba Inu rise? Increasing real-world utility is arguably the most likely scenario. As more merchants accept the coin and more apps are built featuring it, Shiba Inu's price could move higher.
However, there are several scenarios where the demand for the altcoin could decline. If cryptocurrencies as a group fall out of favor, Shiba Inu would almost certainly plunge. Even if cryptocurrencies remain popular, other contenders could push Shiba Inu to the side.
My biggest qualm about the token is that there's too much guessing involved with predicting which way it will swing. The more guessing required, the more buying an asset is more like gambling than investing. Since I tend to be more successful in investing than gambling, I plan to stay on the sidelines with Shiba Inu.