Amid the popularity of meme stocks in the spring and summer of 2021 that catapulted otherwise struggling businesses to new heights, the excitement spilled over to the crypto market. And Shiba Inu (SHIB 1.67%), a digital token that has a dog mascot and was inspired by Dogecoin (DOGE -0.39%), skyrocketed in 2021 along with the crazy behavior of the rest of the market.
But since then, things haven't been so rosy. As of this writing, the price of one SHIB coin is $0.000009206, down 72% in 2022. Are better days ahead for this cryptocurrency in 2023? And should you consider buying it?
Waning investor interest
Shiba Inu was created as a blockchain that was compatible with the Ethereum (ETH -0.39%) ecosystem, thus opening up the potential for faster adoption. This is in contrast to Dogecoin, which really had no functionality from the beginning. But because of Dogecoin's popularity, thanks to public support from famous billionaires like Elon Musk and Mark Cuban, Shiba Inu's founders saw an opportunity.
In the world of cryptocurrencies, however, Shiba Inu really has no competitive edge. Being a network that is compatible with Ethereum doesn't necessarily make people want to own and use the SHIB token.
In fact, when it comes to decentralized applications and non-fungible tokens, users and developers are attracted to the largest and most robust networks that actually have real potential, like Ethereum or Cardano. Plus, there are currently a whopping 549 trillion SHIB tokens in circulation, a silly amount that can't be taken seriously.
Shiba Inu does have some catalysts that could support its growth, but I'm not too optimistic. A Layer-2 solution, called Shibarium, could reduce fees and speed up transactions. And a Shiba Inu metaverse is in the works for community members to interact with one another in new and innovative ways. But despite these efforts, Shiba Inu has failed to catch on with users.
Ethereum's system upgrade with The Merge makes it a more scalable blockchain, and there are other parties making progress building a metaverse. Why would Shiba Inu, which carries a market cap of $5 billion right now, have any chance at success against better-funded and more promising projects?
With no true competitive advantages in the crypto world, coupled with falling interest from the crypto community, it's hardly a surprise that SHIB's price has crashed 90% since its all-time high, set in October 2021. Investors might be tempted to buy in with the hope that the price could bounce back higher, but this is akin to gambling, as opposed to real investing.
While a surge in investor interest and enthusiasm, like what happened during meme-stock mania in 2021, could certainly help Shiba Inu's price skyrocket in short order, this just isn't something to put your hard-earned savings behind. And trying to time when SHIB will get buzz on the internet is a losing proposition, no matter how confident you are in your abilities.
Cryptocurrencies are on the extreme end of the risk spectrum, and therefore investors should practice caution when looking to put money to work in this industry. With this in mind, I recommend staying away from the most speculative tokens that have no real purpose, like SHIB, and instead consider owning the top cryptocurrencies, like Bitcoin and Ethereum, as a way to bet on the industry's potential in 2023 and beyond. And don't forget to adopt a truly long-term mindset, while being fully prepared for volatility.
