Should you stay or should you go? With a hat tip to The Clash's classic rock song, that's the question for Shiba Inu (SHIB -1.24%) investors right now.
To be sure, the meme coin has delivered huge returns since late 2020. But some investors might have a question from another '80s song on their minds -- Janet Jackson's "What Have You Done for Me Lately?" Shiba Inu hasn't done much for investors in recent months, with the digital token plunging more than 60% since late October.
What should investors do? Here are two reasons to sell Shiba Inu now and two reasons to buy even more.
Reasons to sell
There are several reasons why investors should consider selling Shiba Inu. I'd put two at the top of the list.
1. A dismal market
Long-time investors know that it's usually futile to try to swim upstream. When the market for any asset isn't performing well, the chances of success are much lower than they'd otherwise be. And there's clearly a dismal market for cryptocurrencies right now.
Sure, we've seen several digital coins rebound at least somewhat (including Shiba Inu) after an especially ugly start this year. However, no one knows if this is a dead cat bounce or a sustained resurgence. When in doubt, staying out could be the best option.
2. Rising rivals
Even if cryptocurrencies enter into another strong bull market, Shiba Inu might not be the best horse to bet on. Several other digital tokens have advantages that could be enticing to investors.
For example, Avalanche (AVAX -1.21%) turned heads a few months ago when global accounting and consulting firm Deloitte chose its blockchain to develop a disaster recovery system. While Shiba Inu has been criticized for its real-world utility, Avalanche offers a way to develop decentralized finance (DeFi) and other decentralized apps. Its ecosystem already includes 175 projects with more likely on the way.
Terra (LUNC -1.78%) is another blockchain that appears to be a rising star. It supports a range of stable coins pegged to fiat currencies. My Motley Fool colleague Trevor Jennewine thinks that Terra could crush Shiba Inu this year. With Terra's fast-growing DeFi ecosystem, Trevor just might be right.
Reasons to buy even more
While there are reasons to think about selling Shiba Inu, there are some reasons to scoop up even more of the digital coins as well. Here are two that I think especially stand out.
1. Shibarium is coming
Arguably the most important near-term catalyst for Shiba Inu is the coming deployment of Shibarium. This layer-2 solution will help address major issues associated with the Ethereum blockchain on which Shiba Inu is built, especially the high gas fees.
It's possible that the launch of Shibarium will boost interest in Shiba Inu significantly. But when will it be available? Key Shiba Inu developers have indicated that Shibarium is coming sometime in 2022. There's speculation that the launch will be in the first half of the year, but exactly when remains to be seen.
2. Metaverse opportunity
Shiba Inu doesn't have a metaverse as Decentraland and The Sandbox do. But that could change in the not-too-distant future.
Gaming industry veteran William Volk was brought on board to lead the development effort of a multi-player game for Shiba Inu. Australia's Playside Studios won a contract to create this game.
Could Shiba Inu emerge as a major metaverse player? Some Ethereum whales might think so. Several large holders of Ether tokens have bought Shiba Inu recently, according to the whale-tracking website WhaleStats.
The best decision?
No one really knows how the cryptocurrency will perform going forward. It's possible that Shiba Inu could decline due to the overall crypto market malaise, increased competition from other cryptocurrencies, or for other reasons. It's also possible that the digital token could soar with potential catalysts on the way.
I don't own Shiba Inu and don't plan on buying the meme coin anytime soon. My view is that there are better cryptocurrencies and stocks that offer more attractive risk-reward propositions. But the best decision for one person isn't necessarily the best decision for another.