If you think the stock market has been a moneymaker for investors since the pandemic bottom in March 2020, take a closer look at the cryptocurrency space. In the nearly 25 months since crypto valuations bottomed out, the aggregate value of all digital currencies has increased by nearly $2 trillion, or almost 1,400%!
As you might imagine, the Big Two, Bitcoin and Ethereum, garner most of the praise for this increase in value. But it's lesser-known meme coin Shiba Inu (SHIB 0.41%) that's really driving new investors into the crypto landscape.
Last year, Shiba Inu delivered a peak intra-year gain of more than 121,000,000% (that's not a typo!), and it ended 2021 higher by approximately 46,000,000%. It might be the greatest single-year gain for any asset we'll ever see.
The $64,000 question is, what does the future hold for one of the world's most popular cryptocurrencies? Looking two years down the road, is $0.00001 (implying a decline of 62% from its current price of $0.00002613) or $0.0001 (implying a 283% increase) more likely for Shiba Inu?
The case for a near-quadrupling to $0.0001 by 2024
If Shiba Inu is going to eat up another zero over the next two years, it's going to need crypto market dynamics, social media hype, and innovation to all play a key role.
In terms of market dynamics, Shiba Inu has benefited greatly from skeptics not always being able to bet against it. With publicly traded stocks, it's often relatively easy to short-sell shares and/or purchase derivatives (e.g., put options). This isn't the case with cryptocurrencies. Outside of Bitcoin, there aren't any derivatives skeptics can buy. What's more, some crypto exchanges don't allow investors to short-sell digital currencies. In other words, Shiba Inu has enjoyed a buy bias inherent in the crypto space, and this would need to continue for SHIB to reach $0.0001 (a nearly $55 billion market cap).
Shiba Inu has also been extremely popular on social media boards and would need to remain so if SHIB tokens are to nearly quadruple in value. Last year, Shiba Inu was the fourth-most searched digital currency in the United States. Social media buzz on platforms like Reddit and Twitter is critical to bringing new money and investors into the fold.
But most importantly, Shiba Inu is going to need to execute on its two biggest innovations. First, there's the expected public launch of layer-2 blockchain project Shibarium, which should occur sooner than later. Shibarium's sole purpose is to drive down transaction fees. The project is currently being tested privately.
The other major development is non-fungible token (NFT)-based gaming, which will likely make its debut in 2023. Blockchain-based gaming, and Shiba Inu's desire to sell Shiba Lands in its own version of the metaverse, can't take shape until Shibarium has launched and significantly driven down transaction fees. Once these fees fall, it becomes easier (and considerably cheaper) to buy and sell NFTs on blockchain-based platforms.
The case for a big haircut to $0.00001 by 2024
While most projects can make their whitepapers and development plans sound exciting, there's often a big gap between proposals and reality in the cryptocurrency space. Not surprisingly, there are also quite a few reasons $0.00001 (the aforementioned 62% decline) could be in Shiba Inu's future.
Perhaps the biggest issue with Shiba Inu is its lack of a competitive edge and lasting differentiation. Shiba Inu is an ERC-20 token built on the Ethereum blockchain. Despite developing a layer-2 blockchain and NFT-based gaming, it doesn't change the fact that SHIB is nothing more than a payment coin. Other digital currencies with similar market caps offer smart contract capability and/or first-mover advantages. This makes standing out in a space with over 18,000 cryptocurrencies (and counting) incredibly difficult for Shiba Inu.
Shiba Inu isn't a particularly popular payment coin, either. Although its merchant count has risen at a quicker pace than rival Dogecoin, online business directory Cryptwerk lists only 654 merchants as accepting SHIB for payment as of April 5. That's an incredibly tiny figure considering how many businesses there are in the U.S. (over 32 million) and globally (more than 500 million entrepreneurs).
A lack of coin burn could also prove to be a major disappointment. After Ethereum founder Vitalik Buterin sent more than 410 trillion SHIB (about 41% of circulating supply) to a dead blockchain address in May 2021, all subsequent coin burn events have effectively been negligible. Without any additional large coin-burn events, a key catalyst from 2021 is now off the table.
Lastly, history has shown that life-altering gains in the payment coin and protocol token space rarely have any staying power. Most payment coins that soar at least 20,000% in a short time frame wind up retracing 93% or more within roughly two years after hitting their respective peaks.
Now that you've had a look at both sides of the SHIB token, we can get back to the key question at hand: By 2024, is it more likely Shiba Inu falls to $0.00001 or rockets to $0.0001?
While the cryptocurrency space has demonstrated that anything is possible, my clear expectation is that we'll see Shiba Inu add, not eat, another zero after its decimal point by the time 2024 arrives.
One of the biggest problems with popular cryptocurrencies is that social media buzz eventually fades. And when that buzz fades, investors are going to turn their attention to catalysts and factors that'll allow a project to stay in the spotlight. While NFT-based gaming might allow Shiba Inu a brief moment or two to shine, its lack of blockchain differentiation is going to come back to bite. Being nothing more than a payment coin limits Shiba Inu's long-term potential.
Historical precedence is quite powerful among cryptocurrencies, too. Since many of these coins have very little in the way of tangible data for investors to sift through, technical analysis tends to be a commonly used tool to analyze and execute trades. As noted, parabolic moves higher are almost always met with equally large reversions in the crypto arena. Given Shiba Inu's peak gain of 121,000,000% in 2021, I can't help but think a massive retracement awaits.