The meme coin craze of 2021 is long gone, but some investors continue to hold out hope that Shiba Inu (CRYPTO: SHIB) can somehow turn things around. But not much seems to be working for Shiba Inu in 2023. Yes, it's up more than 24% for the year, but it's wildly underperforming other top cryptos such as Bitcoin (CRYPTO: BTC), which is up more than 73% this year.
Of even more concern, the past 30 days have seen the price of Shiba Inu drop by 10%, so it is losing any momentum it might have had. Increasingly, investors want to see real, tangible results. And Shiba Inu may not be able to deliver.
Shibarium launch
The primary catalyst that was supposed to catapult this doggy meme coin into orbit this year was the launch of Shibarium, a Layer-2 scaling solution that was supposed to make Shiba Inu faster, cheaper, and easier to use. As a result, developers would be falling all over themselves to build on top of Shiba Inu, right?
Wrong. It turns out that Shibarium was delayed far longer than planned, and it's still in beta test mode. Moreover, there are questions about the code used to create it, as well as what this scaling solution can really offer in terms of functionality. Yes, there are more transactions happening on Shibarium than a month ago, and yes, the number of Shiba Inu blockchain wallets is increasing, but what about all the development that was supposed to happen on top of the blockchain? People are still promising that "billion-dollar companies" will be building on top of Shibarium, creating things like games, apps, and Web3 experiences. But that has not yet happened.
Coin burning
The second catalyst that was supposed to boost the price of Shiba Inu was coin burning, the process of sending coins to an unusable blockchain wallet, thus taking them out of circulation. Simply stated, coin burning is all about reducing the circulating supply of a coin. In the case of Shiba Inu, there's a huge circulating coin supply (589.5 trillion) and something needs to be done to get rid of all those coins. So the Shiba Inu community has united around the concept of coin-burning projects to reduce the supply. When you reduce the supply, you can theoretically raise the price.
Image source: Getty Images.
However, coin burning is not happening fast enough to matter, so it's not having a huge impact on price. This is just simple mathematics, and there's nothing investors can do about it. For example, the March coin burn rate was 7.68 billion. But in April, that figure fell to 3.26 billion. When you consider the tremendous Shiba Inu coin supply, you can immediately see that even 3 billion coins a month is a drop in the bucket.
Let's say you manage to burn 50 billion coins per year (about 4 billion coins per month) -- it would still take you 20 years to reduce the circulating coin supply by 1 trillion. But even after this Herculean task, you would still have 588.542 trillion coins remaining! By way of comparison, the total maximum circulating supply of Bitcoin is just 21 million.
What happened to the metaverse?
Finally, there's the matter of the Shiba Inu metaverse project. When it was first announced, it sounded exciting. Shiba Inu seemed to be at the forefront of the metaverse trend. But as things stand now, there's still far too much hype about this project. The game experience does not yet exist -- all you can do is buy virtual land in a metaverse world. It has really just become nothing but another way to burn Shiba Inu coins. So I don't understand it when crypto influencers say that this metaverse project is "the new talk of Hollywood."
Should you buy Shiba Inu?
At the end of the day, I don't think Shiba Inu even has value as a pure short-term momentum play. There are other meme coins right now that are generating more momentum than Shiba Inu, including a new frog-themed meme coin that is up more than 2,100% over the past month.
There's an old adage in the financial markets: "Sell in May and go away." That's my advice for anyone still holding on to Shiba Inu right now. Stop hoping that Shiba Inu is going to somehow turn things around. Sell whatever you have and come back after your summer vacation to see what's new in the crypto markets.
