2023 is off to a precarious start, with the market higher but a lot of uncertainty in the air about economic and market conditions moving forward.
Crypto has begun to poke its head out with the price of Bitcoin (BTC 0.70%) rebounding nicely and recently topping $21,000 in hopes of cooling inflation and a weakening dollar. While I don't know what the future holds this year, if inflation keeps cooling and the Federal Reserve stops raising interest rates, there is a chance for a more bullish year for the broader crypto market.
In a bull market and more of a risk-on environment, I see the potential for the popular meme token Shiba Inu (SHIB 0.44%) to beat Bitcoin in 2023. Here's why.
A more volatile token
Bitcoin is the pioneer of cryptocurrencies and blockchain technology, which is a big reason it has become the world's largest and most trusted cryptocurrency. Altcoins like Shiba Inu tend to move with a high correlation to Bitcoin.
But as people and institutions all over the world have adopted Bitcoin and it's become more ingrained into the mainstream financial system, the price of Bitcoin has become more stable than the altcoin market, not that one would necessarily call Bitcoin stable in the grand scheme of things.
Bitcoin Price data by YCharts.
While things can always change quickly in crypto, since the pandemic, when the price of Bitcoin falls, I expect altcoins to fall more and have more downside. But on the flip side, when Bitcoin rises, I would expect altcoins to swing higher, making the volatility both a pro and a con for many altcoins.
Arguably the most viral cryptocurrency
Few altcoins have been more volatile or created more buzz than the meme token Shiba Inu, which now has over a $6.5 billion market cap.
Shiba Inu rose to prominence as a joke on Dogecoin (DOGE 2.11%), which started the meme token craze. Even in 2022, when the crypto market fell into a crypto winter, Binance, the largest crypto exchange in the world, reported that Shiba Inu was one of the three large most-watched cryptocurrencies in 2022, along with Bitcoin and Ethereum (ETH -0.03%).
And this buzz has continued into 2023, with Shiba Inu ranking first on CoinMarketCap's trending list as recently as Jan. 9, so there is really no token better than going viral and generating buzz than Shiba Inu.
The cryptocurrency has also generated interest due to its soon-to-be-launched Shibarium layer 2 protocol, which "provides the benefits of scalability, faster transaction times, lower fees, and an expanded development framework" for the Shiba Inu ecosystem. This is the first time developers are attempting to really improve the technical capabilities of Shiba Inu, so it will be interesting to see how it plays out.
How Shiba Inu wins in 2023
I'll clarify here that I still much prefer owning Bitcoin over Shiba Inu. I also think that Bitcoin's further stability is more evidence of its growing acceptance and long-term viability.
But I could see Shiba Inu outperforming Bitcoin this year under the right conditions. We'll really need more favorable buying conditions and more of a risk-on environment. That means more signs of cooling inflation and the Fed ending its rate-hiking campaign and potentially cutting rates later this year as well.
I also think investors need to regain some confidence back in the industry, especially after the FTX bankruptcy and the contagion it has spread. But if crypto escapes the crypto winter and goes on a bull run, I would expect Shiba Inu to outperform Bitcoin due to its greater volatility and virality.
