It's been a rough few months for cryptocurrency, but Shiba Inu (SHIB 0.96%) has taken an especially hard hit since late last year. While major cryptos like Bitcoin (BTC 0.03%) and Ethereum (ETH 0.64%) have fallen around 35% from their peaks in November, Shiba Inu has fallen more than 60% from its all-time high.
Over the last week, though, Shiba Inu has appeared to make a comeback. Its price has increased by more than 50% over the last seven days, and nearly 10% in the last 24 hours, as of the current writing.
Does this mean now is the right time to invest? Here's what you need to know before you buy.
Why is Shiba Inu increasing right now?
First, it's important to understand why Shiba Inu is surging. There are many reasons why any stock or crypto could see its price increase at any given time, and Shiba Inu is no different.
One potential reason is that it recently partnered with Welly's fast-food chain. The restaurant, located in Italy, is Shiba Inu-themed and even has a Shiba Inu dog as its official image. It also accepts the cryptocurrency as a form of payment, and it plans to include it throughout its marketing materials.
Another catalyst behind Shiba Inu's recent rally is Shibarium, its latest blockchain project. This project aims to reduce transaction fees, which could make Shiba Inu more affordable for users. While Shibarium isn't live just yet, its development could be an encouraging sign for investors.
The cryptocurrency also plans to enter the metaverse, with developers promising to start selling virtual plots of land. The metaverse is one of the trendiest topics in investing at the moment, and this announcement could be helping to fuel Shiba Inu's latest surge.
What does this mean for you?
While these developments may be promising, it's important to keep in mind that Shiba Inu is still an extremely risky investment. It does have more real-world utility than in the past, but the crypto space is highly competitive. At the moment, there's not much that sets Shiba Inu apart from other cryptocurrencies.
Although it can be used as a form of payment, there are other cryptocurrencies like Bitcoin that are far more widely accepted. Unless Shiba Inu develops a competitive advantage over Bitcoin, it will be tough for it to see long-term growth.
Also, unlike competitors like Ethereum, Solana, and Cardano, Shiba Inu doesn't allow decentralized applications (dApps) on its blockchain. This gives it a significant disadvantage, as dApps like decentralized finance projects and non-fungible token (NFT) marketplaces are one of the leading areas of growth for crypto.
Another concerning point is that nearly 65% of all the Shiba Inu coins in existence are owned by just 10 investors, according to data from CoinMarketCap. If any of these investors choose to sell, it could cause Shiba Inu's price to plummet overnight.
Shiba Inu is a tempting investment, especially as its price skyrockets yet again. However, it's also an incredibly risky cryptocurrency, and it's likely to experience even more volatility in the future. By understanding these risks, it will be easier to make informed investing decisions and protect your portfolio.