The Shiba Inu (SHIB -8.31%) token has proved naysayers wrong more than a few times. The price of the meme cryptocurrency soared 49,000,000% in 2021, far outpacing anyone's expectations. But could SHIB, which is priced at $0.00002193, put up similar gains in 2022 and reach $1?
Not likely.
To get there, the cryptocurrency would need to rise by roughly another 4,000,000% on top of what it's already accomplished. That's a feat that even the most wildly popular meme cryptocurrency would have a difficult time achieving.
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Why SHIB hitting $1 isn't likely
One of the reasons some people speculate SHIB could hit $1 is that the cryptocurrency is gaining more traction as a form of payment.
Indeed, online electronics retailer Newegg already accepts the coin, as do Tesla, GameStop, and AMC Entertainment.
But Shiba Inu isn't unique in its ability to be used as a form of payment. Even more importantly, other cryptos like Bitcoin are accepted by many more retailers, and Bitcoin is far more popular among consumers as a payment token.
That means it'll be very hard for Shiba Inu to edge out Bitcoin or other popular coins as a dominant form of crypto payment. And without that practical utility, it's difficult for any coin to continue rising in value.
But crypto optimists also make the case for SHIB hitting $1 by pointing to the fact that the coin has already exploded in value in a very short time. Looking at Shiba Inu's rocketing price last year can make it feel like the crypto can replicate those same results.
But here's the problem with that logic. Right now there are nearly 550 trillion Shiba Inu coins out there. If the coin were to reach the price of $1, then that would mean the cryptocurrency would be worth a mind-blowing $550 trillion.
To put that figure in perspective, the entire cryptocurrency market reached a peak of $3 trillion in value back in November, before tumbling over the past six months to $1.8 trillion. Or, to look at it another way, it would be many times greater than world gross domestic product, which was $85 trillion in 2020.
So, for Shiba Inu to hit $1, it means that the value of the coin would be more than 300 times larger than the entire cryptocurrency market right now -- or more than six times more than global GDP.
Sorry, but for any of a number of reasons, that's probably not going to happen.
A better way to think of SHIB and other coins
It may be tempting for investors to look at SHIB and other cryptocurrencies and think to themselves, "If it could just reach X price..." but a better way to approach cryptocurrency investing is to try to determine how useful a coin and its blockchain are before investing in it.
For example, you may find that Bitcoin, with its use as a store of value and its first-mover advantage, has value beyond mere speculation. Or, you may find that Ethereum, with its wildly popular blockchain, could be a good investment because its technology is the go-to network for decentralized finance applications.
In either case, it's best to look at cryptocurrencies that have the potential to increase in value because they offer some sort of utility. Hoping that enough people get excited about Shiba Inu -- or any investment -- without considering what practical application it has is just speculating.
That doesn't mean Shiba Inu doesn't have the potential to increase in value, but if you're hoping that enough crypto investors will drive up its price to $1, it looks very unlikely.
