For more than a century, the stock market has stood on a pedestal as one of the greatest wealth creators on the planet. Though it might not outperform bonds, housing, or commodities every year, no other investment vehicle has delivered a higher average annual return.
But narrow that time frame down to a couple of years and the story changes completely. Brand-name cryptocurrencies have run circles around the stock market for years. In fact, the aggregate value of digital currencies has skyrocketed to $1.67 trillion, as of late evening on Feb. 21, from $141 billion during the March 2020 low.
Shiba Inu-themed coins were virtually unstoppable in 2021. Image source: Getty Images.
Yet out of more than 17,000 listed cryptocurrencies, it's the jaw-dropping gains of Shiba Inu (SHIB -0.73%) that stand out most. Last year, SHIB tokens gained approximately 46,000,000%!
The big question is: What's next for Shiba Inu? Does it effectively double in value and head to $0.00005 per coin, or will its tokens shed more than half their value and hit $0.00001?
The case for Shiba Inu to double
The optimists' case for the world's most-popular cryptocurrency relies on innovation driving results, increased visibility, and a larger community.
Whereas social media buzz and confirmation bias were strong tools that drove SHIB higher in 2021, investors will be looking for project development to do the talking this year and into 2023. Sometime soon, developers will launch layer-2 blockchain project Shibarium. Since Shiba Inu is an ERC-20 token built on the Ethereum blockchain, it's subject to the high transaction fees that occasionally plague Ethereum's network. Shibarium is designed to significantly lower these fees.
To build on this point, Shibarium will open the door a bit further regarding the development of Shiba Inu's metaverse. Developers recently announced plans to sell digital plots of land, known as Shiba Lands. Doge Killer (LEASH) token holders will be placed in a queue based on their LEASH ownership to purchase these Lands. LEASH is a Shiba Inu ecosystem token that's native to decentralized exchange ShibaSwap. In other words, Shibarium lowering transaction fees paves the way for non-fungible token (NFT)-based gaming.
To head higher, Shiba Inu probably needs to land the elusive whale, Robinhood Markets (HOOD 4.44%). Robinhood ended 2021 with 17.3 million monthly active users. However, the company's management team has been reluctant to add certain cryptocurrencies to its trading platform, including Shiba Inu, out of fear of drawing criticism from federal regulators. Listing on Robinhood could go a long way to getting SHIB back to $0.00005.
Lastly, Shiba Inu would need the buzz and confirmation bias created on social media to continue. Platforms like Reddit and Twitter have, thus far, been powerful tools for generating short-term momentum in cryptocurrencies.
Image source: Getty Images.
The reasons SHIB could lose more than half its value
But there's two sides to the Shiba Inu coin. Even though there are nearly 1.2 million unique holders, there's plenty of reason to believe SHIB could lose a little over half its value from where it is at the time of this writing.
To begin with, history has a way of rhyming in the investment realm. There have been quite a few instances where payment coins and protocol tokens of payment networks rallied by 20,000% to 500,000% in a relatively short period of time. The problem is that in the 12-to-26-month period following their respective peaks, virtually all of these payment and protocol tokens went on to lose 90% or more of their value.
The closest example to Shiba Inu is privacy coin Verge, which gained a cool 1,200,000% in about a year. A privacy coin is designed to obfuscate the sender and receiver of funds. After Verge briefly topped $0.30 per token in late 2017, it would go on to shed more than 99.6% of its value. With SHIB gaining as much as 121,000,000% in less than 10 months (Jan. 1, 2021 – Oct. 27, 2021 intra-day peak), history would suggest an equally large pullback awaits.
Shiba Inu is also going to struggle mightily to stand out in a space filled with over 17,000 cryptocurrencies. Despite the development of Shibarium and NFT-based gaming, Shiba Inu is, for now, nothing more than a payment coin. Its blockchain doesn't offer anything that gives it a competitive edge or provides it lasting differentiation. Without any competitive advantages, it could prove impossible for SHIB to replicate its success in 2021.
To add to the above, Shiba Inu hasn't done all that well as a payment coin, either. Looking at things from a glass-half-full perspective, the number of merchants accepting SHIB as a form of payment has rocketed from just a few dozen in October to 637, as of Feb. 21, according to online business directory Cryptwerk. From the glass-half-empty perspective, 637 mostly obscure global merchants accepting a token isn't a needle-mover. It really calls into question SHIB's $13 billion market value.
Image source: Getty Images.
The verdict
Now that we've navigated our way through both sides of the aisle, let's get back to the question at hand: Is $0.00005 or $0.00001 the likeliest next stop for Shiba Inu?
While I'll admit that there's more meat on the bone from the development end with Shiba Inu this year than at any point in 2021, the one aspect that's impossible to overlook is SHIB's complete lack of differentiation in an increasingly crowded space.
Investors and innovators are looking at blockchain technology as a means to resolve core monetary, transparency, and security concerns. Blockchain-based networks that can expedite the transfer of funds from Point A to B, reduce transfer fees relative to existing infrastructure, and/or incorporate smart contracts that allow blockchain to move beyond financial transactions, are what investors crave. Nothing about Shiba Inu's blockchain network suggests it'll be competitive over long periods of time. That makes valuing it as a top-15 cryptocurrency highly improbable.
It's difficult to look past how history has treated high-flying cryptocurrencies as well. Even though no one has a crystal ball, I'm willing to go out on a limb and suggest the $0.00008841 intra-day high in October was the peak for SHIB. There's simply no justification for Shiba Inu to have $13 billion in underlying value when it has virtually no real-world utility or differentiation. A move down to $0.00001 (or lower) appears likely.
