What happened
Over the last 24 hours, the price of Shiba Inu (SHIB -1.31%) had fallen roughly 6% as of 1:55 p.m. ET today for no obvious reason, although investors look to be taking a breather after a strong rally in recent days.
So what
Last Thursday, Shiba Inu traded at $0.00000856 at its low for the day. On Friday and into the weekend, it rallied to $0.000014 and currently trades around $0.000012.
Image source: Getty Images.
Last week was extremely volatile for cryptocurrencies, as the price of Bitcoin briefly dipped below $26,000 multiple times and the collapse of the algorithmic stablecoin TerraUSD spooked investors. Shiba Inu outperformed Bitcoin last week.
Part of this could be related to Shiba Inu's recently launched burning portal tokens, which have begun taking tokens out of Shiba's current overall supply of more than 587 trillion tokens. Some believe this could help Shiba Inu's supply-and-demand dynamics and eventually drive the price higher.
Now what
Shiba Inu started as a meme-inspired cryptocurrency and while it has accumulated a decent market cap, I've never seen any appeal to the token from a fundamental investing standpoint.
It has no real technical advantage or real-world use case. It has an extremely large amount of tokens and if you thought Bitcoin was hard to value, then Shiba Inu is next to impossible.
Additionally, as the Federal Reserve continues to aggressively raise its benchmark overnight lending rate and begins unwinding its balance sheet, which effectively removes liquidity from the economy, investor appetite for riskier assets is likely to decline. I would expect this to be even more of a case for an asset like Shiba Inu, which is why I would recommend staying away.
