If you think the stock market has performed well since the pandemic bottom in 2020, take a gander at the cryptocurrency space. While a roughly 100% gain in the broad-based S&P 500 since March 2020 is nothing to sneeze at, the aggregate value of digital currencies has increased by more than $1.7 trillion, or in excess of 1,200%, in the same time frame.
Although Bitcoin and Ethereum account for a sizable portion of this nominal increase in crypto market value over the past two years, it's highfliers like Shiba Inu (SHIB 2.16%) that have really drawn retail interest into the digital currency arena.
In a typical year, the top-performing publicly listed stock that isn't a microcap is probably going to gain 2,000%, or perhaps a bit more. Last year, Shiba Inu delivered what may go down as the single greatest one-year gain we'll ever see from an investable asset.
Shiba Inu-inspired coins were virtually unstoppable in 2021. Image source: Getty Images.
The story behind Shiba Inu's life-altering gains in 2021
When the bell tolled at midnight on Jan. 1, 2021, a single SHIB token could be purchased for $0.000000000073. If you're wondering why there are so many zeroes after the decimal point, keep in mind that its circulating supply of tokens was initially set at 1 quadrillion (1,000,000,000,000,000). Less than 10 months later, on Oct. 27, SHIB tokens hit their all-time intra-day high of $0.00008841. In eliminating six zeroes after its decimal point, the coin vaulted higher by more than 121,000,000%. In other words, a perfectly timed investment would have turned $1 into more than $1 million in under 10 months.
Even following a sizable pullback, Shiba Inu ended 2021 higher by approximately 46,000,000%.
As I've previously mentioned, these historic gains were primarily the result of increased visibility and crypto market dynamics working in its favor. In terms of the former, SHIB was listed for trading by a number of exchanges last year. This was coupled with the launch of decentralized exchange ShibaSwap in July 2021. ShibaSwap helped improve liquidity, as well as introduced staking, which allows SHIB holders to earn passive income over time. Since mid-October, the median hold time of SHIB on leading crypto exchange Coinbase Global increased from just six days to a whopping 113 days.
The other lift came from a natural buy bias inherent in the crypto space. While it's relatively easy for skeptics to bet against a publicly traded stock by short-selling or purchasing derivatives (e.g., buying a put option), it can be quite difficult to bet against cryptocurrencies not named Bitcoin. There are no derivatives to purchase, and not all crypto exchanges allow short-selling. Thus, the inherent buy bias that propelled Shiba Inu higher in 2021.
Image source: Getty Images.
Shiba Inu's long-awaited catalyst arrives: Next stop, $0.0001?
With SHIB tokens shooting to the moon last year, many holders have been hoping for an encore performance in 2022. But for that to happen, certain catalysts needed to come to fruition. This past week, one of those long-awaited catalysts finally arrived.
On April 12, retail focused online investing app Robinhood Markets (HOOD -1.10%) announced that it was listing four new crypto assets that could be bought and sold on its platform. Shiba Inu is one of the four.
For context, retail investors have been pressuring Robinhood to make this move for quite some time. In November, a petition to list SHIB on Robinhood surpassed 500,000 signatures, which made clear that retail investors wanted the high-flying cryptocurrency available to purchase, hold, or trade one of the most popular online investing platforms.
For its part, Robinhood's hesitance on listing SHIB had a lot to do with how U.S. regulators view assets within the cryptocurrency space. In other words, Robinhood didn't want to list digital currencies that could bring regulatory scrutiny to its operations.
Christine Brown, the chief operating officer of Robinhood Crypto, had this to say in an interview with Decrypt last year: "I also think that our strategy is a little bit different than a lot of the other players out there who are racing to list as many assets as possible right now. We think that the short-term gain we might get is not worth the long-term trade-off for our users."
Despite Brown's comments, Robinhood chose to move forward with listing SHIB just five months later.
For Shiba Inu, listing on Robinhood can further expand the aggregate number of holders of the coin, as well as boost liquidity. With more total holders, merchants may be more willing to accept SHIB as a form of payment.
More importantly, Shiba Inu relies on social media buzz to push higher. With no set date for the public launch of layer-2 blockchain project Shibarium, holders finally have some positive tangible news to grasp onto. There's little question that optimists will use this Robinhood announcement as fuel to make a push toward $0.0001.
Image source: Getty Images.
The Robinhood listing is more than likely a non-event
However, hoping Shiba Inu hit $0.0001 in 2022 and actually having it happen are two different things.
Even though Robinhood ended 2021 with 17.3 million monthly active users, there's a strong likelihood that whatever lift SHIB tokens receive from this listing announcement will fade away within the coming days and weeks. With the exception of expanding the total number of holders of SHIB, Robinhood's announcement shouldn't have any tangible impact on the community or Shiba Inu's utility.
Speaking of that utility, one of the glaring problems with Shiba Inu is that it's nothing more than an ERC-20 token built on the Ethereum blockchain. Without getting too far into the weeds, Shiba Inu is nothing more than a payment coin. Even with its developers trying to craft a gaming ecosystem and metaverse, it's going to be very difficult for Shiba Inu to stand out in an increasingly crowded cryptocurrency space where other blockchain projects offer so much more than payment coins like Shiba Inu.
What's more, it's not as if Shiba Inu is a widely used payment coin. While you might think that the 15th-largest cryptocurrency by market cap would have a large number of businesses willing to accept its coin as a form of payment, online business directory Cryptwerk listed only 655 businesses as accepting SHIB, as of April 15, 2022. Excluding crypto exchanges, we're only talking about around 600 global business (most of which are obscure) accepting SHIB as payment.
Shiba Inu is going to have to contend with historic precedence as well. Though Bitcoin has been the exception, virtually all payment coins and protocol tokens on payment networks that have rallied 20,000% or more in a short time frame have gone on to retrace 93% or more following their peaks. Life-altering gains in the crypto space are often driven by social media pumping and emotions, which can turn on a dime. With SHIB gaining 121,000,000% in under 10 months, the expectation should be that an equally large reversion awaits -- and is likely already underway.
Though optimists would like to believe listing Shiba Inu on Robinhood is enough of a tangible positive to eat another zero after the decimal point, it's far likelier that Shiba Inu will give back all of its gains since the announcement on April 12 and end 2022 considerably lower than where it is now.
