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Why the Shiba Inu Token Is Sinking

By Chris MacDonald – Jan 10, 2022 at 2:08PM

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Is the meme token headed for the moon -- or the history books?

What happened

Amid a broad market sell-off, meme token Shiba Inu (SHIB 3.13%) has posted a decline of 7.5% over the past 24 hours, as of 12:30 p.m. ET. This decline significantly outpaces the broader crypto market, which is down cumulatively 3.3% over the same time frame. Accordingly, it appears that the market-based selling focused on higher-risk tokens such as Shiba Inu is continuing into a new week.

Various bullish takes on the potential for this meme token to head for the moon have driven incredible performance for Shiba Inu over the past year. Despite dropping more than 65% from its recent peak, Shiba Inu remains more than 20,000,000% higher over the past 12 months alone.

However, more conservative investors seem to be skeptical. As investors continue to sell their winners -- and rotate more of their capital into lower-beta, defensive investments -- the sell-off with the SHIB token has continued to outpace the overall market once again today.

Two people sit on a bed next to a Shiba Inu and another dog.

Image source: Getty Images.

So what

The bullish camp behind Shiba Inu continues to tout a number of reasons that this meme token could shoot to the moon in 2022. Rising demand for speculative tokens via a listing on platforms such as Robinhood is one potential factor crypto speculators are looking at. Shiba Inu's recently announced Layer 2 blockchain, named the Shibarium, is also driving investor enthusiasm as developer interest picks up on this network. And the potential for metaverse-themed projects and stablecoins to be added to the Shiba Inu network has many considering the utility angle with this token.

Bears note that many of these projects remain in the conceptual stage for the time being. And while the crypto market is certainly forward looking, the extent to which developer interest turns into real, meaningful progress remains to be seen. Right now, concerns around higher interest rates and a reduced Federal Reserve balance sheet appear to be of bigger concern to investors.

Now what

Rising bond yields, and a search for safety in capital markets, have put crypto investors on edge. This current environment is one that is certainly not friendly for moon shot hopefuls. Those invested in Shiba Inu are seeing what can happen when market sentiment shifts in a meaningful way.

Perhaps Shiba Inu hasn't mooned yet. Perhaps this token is still on its rocket, headed for new highs shortly. However, the temperature of the market right now suggests investors are more concerned with the risks of this token than its potential near-term returns. Accordingly, investors are taking cover today.

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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