Shiba Inu (SHIB 18.10%) stands as one of history's most intriguing and unexpected investment success stories. Started as a partial parody of Dogecoin, which was itself started as a riff on Bitcoin, the SHIB cryptocurrency posted gains of roughly 46,000,000% across 2021's trading and generated fortunes for those who made fortuitously timed investments and sales. However, the token has lost substantial ground in subsequent trading and is now down roughly 86% from the high it hit in October last year.

What comes next for Shiba Inu? Read on for a look at bullish and bearish dynamics that could shape the meme coin's performance going forward.

A Shiba Inu dog.

Image source: Getty Images.

SHIB could benefit from the next crypto bull market

The broader cryptocurrency market has tended to be very cyclical in terms of pricing. Shiba Inu's explosive rise coincided with the tail end of the last big crypto bull market, and its subsequent sell-offs have largely occurred in tandem with the market's shift into a bearish phase. If the crypto market sees another strong run, SHIB has avenues to trading significantly above current pricing levels.

Despite a big drawdown for its token price, Shiba Inu continues to have a large base of enthusiastic supporters. Strength of brand can count for a lot in the crypto world, and SHIB still stands as the 12th-largest overall cryptocurrency and has a market capitalization of roughly $7 billion.

The token's base of supporters -- the "SHIB Army," as they're sometimes called -- has continued to stand by the cryptocurrency and tout its potential as an investment. That hasn't stopped the meme coin from seeing big sell-offs in conjunction with trends impacting the broader crypto market, but it has given SHIB staying power even as new cryptocurrencies and meme tokens have been created.

If Shiba Inu retains its brand strength and dedicated community of supporters, the token could capitalize on rebound momentum or another wave of meme-powered pricing gains. It's also possible that gaming and metaverse projects tied to the token could boost adoption or send prices higher through coin burning.

The token still looks incredibly high risk

In some ways, Shiba Inu has been the ultimate never-say-never investment. Even after some precipitous sell-offs, the token is still up roughly 22,000,000% from its pricing low in 2020. If the broader crypto market goes on to see another strong bullish phase, it's certainly not impossible that the meme token will go on an explosive run. Still, there are reasons to be cautious despite the cryptocurrency's history of proving doubters wrong.

While a metaverse that uses SHIB as an underlying token is being built, and other burning initiatives are underway to reduce the total coin count outstanding, Shiba Inu still looks like a fundamentally weak investment. SHIB's primary functions are as a speculative investment or a currency. Despite its considerable brand strength and community of backers and enthusiasts, the token doesn't have much to set it apart from other ERC-20 tokens that primarily function as speculative investments or digital payment vehicles.

While it's clear that Shiba Inu has captivated imaginations and generated excitement as a speculative investment, the case for the token being a viable currency looks pretty shaky. SHIB's price is prone to large fluctuations in relatively short periods of time, and using it as a payment method means buyers and sellers are exposed to significant volatility even if the coins received by the seller are converted to fiat currency or stable coins upon receipt.

Adoption among new users and investors could send Shiba Inu's price higher, but it seems unlikely that it will ever become popular among merchants. That means its valuation will likely continue to be driven by pricing trends in the broader crypto market and meme-oriented investors who could ditch the token in favor of the next exciting story.   

Should you buy SHIB today?

Shiba Inu remains a speculative and relatively high-risk investment. For investors who see promise in the community behind the token or are willing to take a gamble in pursuit of potentially explosive gains, it's possible that SHIB will go on another winning run. However, if you're not willing to risk losing a large percentage of your initial investment in the token, it's probably better to look for cryptocurrencies and stocks that are a better fit for your portfolio goals.