Investors have been taken on quite the ride since the beginning of 2020. Stock investors have now contended with two bear markets in a span of 2 1/2 years. They're also facing historically high inflation and back-to-back quarters of U.S. gross domestic product retracements.
Yet in spite of this turmoil, cryptocurrencies have soared. Since bottoming out at an aggregate valuation of $141 billion in March 2020, the total value of the crypto market has exploded to nearly $3 trillion. Even following a sizable pullback, the value of all digital currencies is higher by nearly 700% in 29 months.
Shiba Inu-themed coins were practically unstoppable in 2021. Image source: Getty Images.
Shiba Inu has set the standard for historic gains in the cryptocurrency space
Although crypto's "Big Two" -- Bitcoin and Ethereum -- are given a lot of credit for these nominal gains, it's the jaw-dropping percentage gain in meme token Shiba Inu (SHIB 0.41%) that's driven interest in the digital currency space.
In 2021, Shiba Inu did things that were previously thought impossible from an investable asset. After beginning the year at a microscopic valuation of $0.000000000073 per token, according to CoinMarketCap.com, SHIB would climb to an all-time high of $0.00008841 less than 10 months later. By removing six zeroes after its decimal point, SHIB coins skyrocketed an unfathomable 121,109,489%! Put another way, an investor with the luck, stomach, and wherewithal to invest one dollar at midnight on Jan. 1, 2021 was a millionaire by Oct. 27, 2021.
Following a sizable pullback, SHIB tokens ended 2021 higher by approximately 46,000,000% and set the standard for what momentum and social media hype can achieve in the cryptocurrency space.
However, Shiba Inu investors aren't counting on SHIB's run-up being a one-and-done. In the two-month stretch between June 18, 2022 and Aug. 18, 2022, SHIB has more than doubled in value to nearly $0.000015. It's beginning to reignite the momentum-based euphoria that sparked the token's 2021 run, as well as renewing calls among holders that SHIB could eventually reach $0.01 per coin.
What would it take for Shiba Inu to increase in value by more than 67,000% to reach $0.01 per token by as soon as 2023? Let's take a closer look.
CRYPTO: SHIB
Key Data Points
What would it take for Shiba Inu to reach $0.01?
In order for SHIB to make a second historic run over a three-year stretch (2021-2023), three catalysts would have to be executed flawlessly.
To begin with, innovation would have to drive Shiba Inu tokens higher. The key project at the moment is the expected launch of a public beta test of Shibarium during the third quarter (July through September).
Shibarium is an internally developed layer-2 blockchain that's designed to dramatically lower transaction costs for SHIB. If transactions costs fall by a considerable amount, it would likely encourage more merchants to accept SHIB as a form of payment. But more importantly, it would roll out the red carpet for non-fungible token (NFT)-based gaming and NFT marketplaces to thrive. Shiba Inu's developers can't meaningfully venture into the metaverse or blockchain-based gaming until transactions costs are brought down.
Secondly, Shiba Inu would have to conduct meaningful and ongoing coin burn events. Think of coin burn as being similar to a publicly traded company buying back its own stock. By removing existing tokens from the circulating supply, each remaining coin that investors hold on to is a bit scarcer. That's important, because CoinMarketCap.com lists the project as having roughly 549 trillion coins outstanding, as of this past week. There would need to be a significant number of coins removed from circulation to provide a lift to SHIB's price.
For what it's worth, Ethereum founder Vitalik Buterin, who was gifted roughly half of SHIB's 1 quadrillion token supply, sent more than 410 trillion coins to a dead blockchain address last year. With these coins now inaccessible, 41% of SHIB's supply was taken out with the click of a button.
And third, Shiba Inu would need a repeat of the social media euphoria that sent it ascending to the heavens in 2021. While there's no concrete blueprint, social media sites would need to be abuzz with SHIB for momentum to take over.
Image source: Getty Images.
The doghouse is far likelier for SHIB than reaching $0.01 in 2023
Now that we've had a look at what would need to happen for Shiba Inu to reach $0.01 by 2023, let's get down to brass tacks: How feasible is $0.01 by 2023?
While nothing can ever be written off in the cryptocurrency arena following a 46,000,000% single-year gain, there's virtually no chance of SHIB coming anywhere close to $0.01 by the end of next year. In fact, winding up in the doghouse is more likely than SHIB heading higher from its current price.
To start with the basics, a $0.01 target would equate to a nearly $5.5 trillion valuation. That's nearly two times the market cap of Apple, a company that's generated over $118 billion in operating cash flow over the trailing-12-month period and has led with its innovation for more than a decade. Shiba Inu hasn't demonstrated that any of its innovations are going to work, let alone be useful in the real world. That's makes a $5.5 trillion market cap pretty much untenable.
Maybe the bigger issue is that Shiba Inu lacks anything resembling a competitive advantage. While it does have faithful holders, Shiba Inu is, ultimately, nothing more than an ERC-20 token on the Ethereum blockchain. In other words, it's just a glorified payment coin, and there are thousands of cryptocurrencies that can facilitate payments.
To build on this point, it's not even a popular payment coin. According to online business directory Cryptwerk, only 659 mostly obscure global merchants were accepting SHIB as a form of payment in August 2022. This figure hasn't budged in months due to the volatility in SHIB's price and its inability to stand out in an increasingly crowded field.
Coin burn also seems unlikely to meaningfully help Shiba Inu. While a small percentage of merchants and coin burn events could remove millions or even billions of tokens from circulation, whittling down 549 trillion coins into a much smaller figure that would allow for SHIB's price to appreciate is going to take a really long time.
Lastly, history has proved unkind to payment coins that deliver monumental gains. Following their peak (which was Oct. 27, 2021 for SHIB), payment coins have a history of losing 93% to 99%+ of their value in the subsequent two years. Shiba Inu already shed 91% of its value at its peak decline through June 2022. The expectation is that SHIB is facing an even larger retracement.
