Popular meme token Shiba Inu (SHIB -1.99%) is stirring up some excitement. The crypto is on the rise this year, with a gain of 64% so far.
Why is this such a big deal? Because investors may be wondering if Shiba Inu is getting ready to deliver a performance like that of 2021. That's when it soared a mind-boggling 45,000,000%.
Shiba Inu gave back some of those gains last year, when it fell along with the entire cryptocurrency market. But many investors remain interested in the token and haven't lost hope in Shiba Inu's potential. It's even the second-biggest holding of Ethereum whales right now, according to Whale Stats.
So, should you buy Shiba Inu while it's trading well below $0.01? Let's find out.
Shiba Inu's path so far
First, a little background on Shiba Inu's path so far. The crypto with the cute dog logo caught the eye of investors in 2021 -- less than a year after its launch. Investors were looking for the next big crypto star. And Shiba Inu supporters -- the Shib Army -- built up excitement about the crypto across social media. As a result, Shiba Inu took off.
But here's the problem: Shiba Inu actually doesn't offer anything more than the thousands of other cryptocurrencies out there. In fact, it offers a lot less in some cases. Shiba Inu isn't a blockchain. It's simply a token that runs on the Ethereum network.
So today, its uses are limited. You can use Shiba Inu to pay at certain merchants. Or you can invest in Shiba Inu or stake your holdings to earn passive income. Most crypto players offer the exact same things. And other cryptos have their own blockchains to run apps that may change the way the worlds of finance or entertainment operate down the road.
All of this means Shiba Inu doesn't stand out from the competition. And that doesn't weigh in Shiba Inu's favor.
Still, this cryptocurrency may be days away from its biggest moment ever. Shiba Inu developers are about to launch Shibarium. This is a Layer 2 solution that could solve some of Shiba Inu's problems. Since the token runs on Ethereum, it's subject to the slow speed and often high transaction costs of that blockchain. Shibarium would change all of that, with operations moving on to this separate network.
A potential catalyst as soon as next week
Developers delayed the launch of Shibarium more than once last year. But a post on social media by Shiba Inu's lead developer prompted Shiba Inu watchers to speculate about a launch as early as next week.
The launch -- whether it happens then or later -- clearly could drive Shiba Inu higher. But will the gains last and help lift Shiba Inu to $0.01? I don't think so. Here's why.
First, even with the massive gains back in 2021, Shiba Inu has never even made it close to reaching $0.01. It's always traded at a fraction of a cent -- and for good reason. Shiba Inu's coin supply totals 549 trillion. If the cryptocurrency were to reach $0.01, its market value would top $5.4 trillion. It would be worth more than the entire cryptocurrency market today. That's unlikely to happen.
Efforts are underway to burn Shiba Inu tokens to reduce supply. But you would have to burn more than 99% of today's supply to reach a level that would support significant gains.
All of this means Shiba Inu isn't likely to reach $0.01 anytime soon. Sure, a near-term catalyst like the Shibarium launch could push Shiba Inu higher. But the cryptocurrency's potential is limited -- and as we saw last year, declines may happen quickly at any moment. So, for the long-term investor, it's best to consider more promising cryptocurrency opportunities.
