Controversial meme token Shiba Inu (SHIB 30.25%) has enjoyed a rebound in the past few weeks. It traded at a low price of $0.000019 per token in January, and has since soared by more than 57% to about $0.00003, where it trades as of this writing. 

But let's back up a step, because that pales in comparison to the 43,800,000% return the token generated in 2021. Had you invested just $2.29 in Shiba Inu on Jan. 1, 2021, and held on for the entire year, you'd have earned a return of over $1 million. There aren't many investments in history that would've made you a millionaire for less than the price of a cup of coffee, but here we are.

A sleeping Shiba Inu dog.

Image source: Getty Images.

Not everyone is having a good time owning Shiba Inu, though. If you were late to the party and purchased the token in October 2021, at its all-time high price of more than $0.000088, you'd be sitting on a hefty loss of about 66%. Therefore, it's important you don't get too caught up in the recent rally, which might prove to be a dead cat bounce. Here's why.

There's a growing laundry list of challenges

Cryptocurrencies have suffered a broad decline over the last few months, with even Bitcoin, which is the largest token by market value, falling 38% from its all-time high. It seems the market is still figuring out the best uses for most cryptocurrencies, because consumers simply haven't adopted them as a payment mechanism. 

While Bitcoin is accepted as payment by 7,700 businesses worldwide, Shiba Inu is having an even harder time gaining traction, with just 621 merchants on board. And it's worth noting that they're mostly small, obscure businesses, so it raises the question: Why would consumers buy and hold Shiba Inu tokens if they're almost impossible to spend?

It leaves speculation as the primary reason, and that shouldn't come as a surprise given the multimillion-percentage-point gain last year. Ultimately, any currency that rises in value that much, then gets cut down by more than half, is useless as a means of payment because it's impractical for businesses or consumers to keep track of its purchasing power. 

And on that note, the U.S. government is coming for its tax dollars on cryptocurrency gains, with new laws being proposed that would force crypto brokers to disclose their customers' transactions to the IRS. Given that decentralization and anonymity are two big arguments in favor of owning cryptocurrencies, it's reasonable to expect some tokens to take a hit if investors are liable for taxes every time they sell, exchange, or spend their cryptocurrencies. 

Future gains might be underwhelming

It's easy for investors to assume that just because Shiba Inu rose 43,800,000% before, it can do it again. But it's important to do the math, because the token is significantly larger now by market value than it was in January 2021, making it harder to pull off big gains.

In fact, if Shiba Inu did rise 43,800,000% from its current price of $0.00003, it would reach a price of $13.14 per token. That would translate to a market valuation of $7.7 quadrillion

If that sounds crazy, it's because it is. If Shiba Inu reached that valuation, it would be worth almost 18 times more than all of the recorded wealth in the world -- which now stands at $431 trillion.

A more realistic target for Shiba Inu investors might be $0.000088 per token, which is the previous all-time high. That would represent a 197% increase from here, but if history is a guide, previous meme-token king Dogecoin suggests Shiba Inu might never reclaim that level

It's worth noting there are several popular stocks that Wall Street analysts think could return even more than 197%, plus they typically carry much less risk than cryptocurrencies. If there was ever a time to cash out of Shiba Inu and invest in more traditional assets like stocks, it might be now while the token is up in price.