Rapidly rising interest rates throughout 2022 spooked investors, pushing them out of the riskiest assets into safer ones. Amid this shift, the cryptocurrency market was crushed, going from $2.2 trillion at the start of 2022 to under $800 billion at the end. The so-called "crypto winter" was here.
It's been a bit of a resurgence this year, as the cryptocurrency market cap is up about 51% in 2023 (as of April 5). And some of the most popular digital assets, like Shiba Inu (SHIB 0.39%), have seen their prices skyrocket through the first three months of 2023. As we've seen in the past, this meme token can quickly shoot up in a very short period of time.
Even with this renewed sense of optimism, it might be time to book your gains and sell Shiba Inu. Here's why.
Shiba Inu has some positive traits
First, let's get to some of the positive things going on with Shiba Inu. As of this writing, it's the 14th most valuable crypto network in the world, with a market cap of $6.6 billion. This was largely made possible by genius marketing by the founding team to garner interest in the community. Being mentioned by Tesla CEO Elon Musk and Ethereum co-founder Vitalik Buterin also helped.
Riding on the coattails of the popularity of Dogecoin, Shiba Inu was built to be compatible with the entire Ethereum network, opening it up to a potentially much bigger user and developer base. Shiba Inu can work with different crypto wallets, decentralized exchanges, and decentralized finance protocols.
And to its credit, Shiba Inu is working on important developments that could drive greater adoption. Shibarium, a layer-2 scaling solution, is meant to help drive down fees and increase transaction speeds. It was slated to release a beta version in March. Shibarium would focus on applications related to the metaverse, gaming, and non-fungible tokens. The hope is that as more users and developers are drawn to Shiba Inu and its layer-2 system, demand for the SHIB token will rise, and its price will go up.
Shiba Inu lacks a compelling investment case
Despite what some SHIB bulls might consider to be favorable characteristics, this meme token has a lot to dislike. For starters, its price seems to be entirely driven by various hype cycles spurred by tweets from famous businesspeople. Although they could lead to quick gains, these events are very unpredictable, as they really have nothing to do with Shiba Inu's fundamentals. Therefore, investors should avoid trying to time the market, which is a recipe for financial ruin.
But perhaps the most important reason to sell SHIB is that it lacks a true competitive edge in the vast world of more than 23,000 cryptocurrencies. There are other more promising blockchain projects that investors might want to consider over Shiba Inu. Ethereum, for example, is the most popular smart-contract cryptocurrency that recently completed the highly anticipated Merge, which should set it up to scale in an efficient manner.
Then there are other extremely innovative cryptos, like Cardano and Solana. By utilizing a predictable, research-driven, phased development approach, Cardano tries to minimize mistakes as it grows. And it already has enterprise-level solutions in various industries. Solana, with its ability to process 50,000 transactions per second, wants to disrupt the lucrative payments industry. A cryptocurrency's long-term success should depend on its ability to introduce real-world use cases. Ethereum, Cardano, and Solana are set up to run circles around Shiba Inu in this critical area.
At a high level, betting on SHIB to increase would be an extremely risky move, as its price could go up or down by a lot at any moment for a number of different reasons that are likely impossible to know ahead of time. There are safer digital assets to park your hard-earned capital in. So, if you're lucky enough to be sitting on a gain on your Shiba Inu holdings in 2023, it's probably best to sell and book the profit.
