Shiba Inu (SHIB 0.41%) shocked investors last year as its price appreciated 42,000,000%. That epic performance helped the meme token amass a significant following, and many members of the Shib Army are more bullish than ever, even though its price has fallen 76% from its high.
Part of that enthusiasm is undoubtedly due to optimistic price targets. For instance, digital asset specialist Telegaon has outlined a scenario in which Shiba Inu could surpass $5 by 2050. That implies a 26,000,000% upside based on a current price of $0.00001921 per token.
Is that possible? Let's take a look.
CRYPTO: SHIB
Key Data Points
Several catalysts could drive price appreciation
Despite generating jaw-dropping returns last year, Shiba Inu has not advanced blockchain technology to any meaningful degree. Since its launch, its greatest assets have been brilliant branding and viral popularity, but that might change shortly.
Shiba Inu is currently powered by the Ethereum blockchain, meaning users have to pay outrageous fees to transact within the ecosystem. That presents a significant headwind to adoption. Fortunately, there is a fix in the works. Shibarium is a layer-2 scaling solution that will accelerate throughput and reduce fees by moving Shiba Inu transactions to another platform. It's expected to go live sometime this year, paving the way for increased adoption of other projects in the Shiba Inu ecosystem.
On that note, the Shiba Inu metaverse went live at the end of April. Players can buy digital plots of land, build their own projects, and earn a passive income within the virtual world. While Shiba Inu faces competition from other metaverse-style games like Decentraland, this project could still be a game-changer. Specifically, it could supercharge demand for the cryptocurrency, sending its price higher.
Better yet, the Shiba Inu metaverse incorporates a burn mechanism that allows landowners to rename their property in exchange for destroying Shiba Inu tokens. That's particularly noteworthy because burn projects are essential for Shiba Inu to reach $5.
Image source: Getty Images.
Burn projects are crucial
In April, the Shiba Inu burn portal went live on ShibaSwap, a decentralized exchange that allows users to swap tokens and earn staking rewards. The platform allows investors to destroy Shiba Inu tokens by sending them to a dead wallet. In exchange, investors receive burntSHIB tokens, which will generate passive income in the form of Ryoshi Vision tokens, but the reward doesn't look very enticing. Just 0.49% of Ryoshi transactions will be distributed to the holders of burntSHIB, and the Ryoshi Vision token itself is currently worth 99% less than Shiba Inu.
Regardless, the motivation behind the burn portal is simple: Destroying part of the Shiba Inu supply makes the remaining tokens more scarce, and therefore more valuable. The circulating supply of Shiba Inu currently sits at 549.06 trillion tokens, but a significant number will have to be burned for its price to reach $5.
Assuming Shiba Inu's market cap remains constant at $10.5 billion, the supply of Shiba Inu would need to be cut down to 2.1 billion tokens for the token price to reach $5. That means 99.9996% of all existing tokens would need to be destroyed. But what happens if the price appreciates in the meantime?
Let's imagine that efforts like Shibarium and the Shiba Inu metaverse generate tremendous enthusiasm throughout the crypto community and Shiba Inu's valuation climbs 100-fold. The market cap would then be $1.05 trillion. At that level, to reach $5 per token, the supply would need to be cut to 210 billion tokens. That means 99.96% of all existing tokens would need to be destroyed. That's still a very unlikely outcome.
Is Shiba Inu a buy?
While it is technically possible for Shiba Inu to reach $5 by 2050, the odds are very long. Burn projects require people to willingly throw money away, and that makes for a poor investment thesis. For that reason, if you're looking to cash in on cryptocurrency, I think there are better cryptocurrencies to buy.
