With a market capitalization of $15 billion, Shiba Inu (CRYPTO:SHIB) is worth more today than businesses like Crocs, Peloton, and Restoration Hardware. The Dogecoin (CRYPTO: DOGE)-inspired token had two massive price pops during the course of 2021, and ended the year with the greatest performance of any single cryptocurrency, a whopping 25,000,000% return.
Since Shiba Inu reached an all-time high price of $0.0008 in October last year, it has fallen precipitously, shedding 65% of its value in less than three months. Wild and unpredictable price movements are normal with meme coins.
Does Shiba Inu deserve a place in your portfolio now that it's off big from its 2021 high? Let's dive in and find the answer.
Background on Shiba Inu
Like Dogecoin, Shiba Inu is a dog-themed cryptocurrency that has an extremely large quantity of supply in circulation. Of the initial 1 quadrillion tokens issued, 50% were sent to Ethereum (CRYPTO: ETH) co-creator Vitalik Buterin in order for the project to gain credibility among the broader crypto community. After Shiba Inu soared during meme-stock mania last spring, Buterin donated $1 billion of Shiba Inu to the India COVID Crypto Relief Fund. He then burned, or destroyed, another 40% of the supply, reducing the amount of Shiba Inu in circulation.
What makes Shiba Inu different from Dogecoin is that it runs on the Ethereum blockchain, making it much more functional and compatible with other Ethereum-based tokens. It benefits from its availability on a growing number of crypto exchanges, including Coinbase. Additionally, its community has developed a decentralized exchange called ShibaSwap, which allows holders to stake their Shiba Inu holdings as well as buy and sell non-fungible tokens. Having Tesla CEO Elon Musk tweet about his Shiba Inu puppy certainly helps drive interest from speculators, too. By the way, he doesn't even own the coin.
Probably the most interesting development happening with Shiba Inu is something called Shibarium. This is a layer 2 blockchain scaling solution that will allow Shiba Inu holders to transact with the token without using ETH, Ethereum's native coin. Because Ethereum's processing fees, known as gas fees, are inflated thanks to high demand and limited capacity, Shibarium lets Shiba Inu users bypass Ethereum by being an in-house solution. It's set to release sometime this year.
Should you buy Shiba Inu?
While Shiba Inu possesses some positive characteristics in the form of real-world utility, a potential metaverse application, and the possibility of a shrinking supply, I'm not entirely sold on the cryptocurrency. There are better and more promising Ethereum-based projects out there, like Cardano and Solana, with deeper developer networks that investors should look at instead.
Shiba Inu has garnered a ton of attention since its founding, and even after its price drop, it is the 14th most valuable cryptocurrency on the market. Admittedly, there is a lot more to like about Shiba Inu than its rival Dogecoin. But even then, I don't see any legitimate advantages that it has in the overall crypto industry. Plus, there is still a huge level of uncertainty as it relates to the ongoing development and eventual completion of Shiba Inu's ambitious projects.
If you can handle the volatility and accept the unknowns with this crypto, then maybe allocating a very small amount of a well-diversified investment portfolio makes sense. It would definitely be a gamble, though. This is a course of action I don't recommend.