Even though Shiba Inu (SHIB 0.43%) is down nearly 92% from an all-time high in October 2021, investors are still holding out hope that this popular meme coin will have one more explosive rally.
Certainly, Shiba Inu does have a very passionate community of supporters and investors. But does Shiba Inu, which recently traded at just $0.000007482, have enough explosive upside to make the move to the $1 mark? There are two important factors to consider.
Coin supply
The first factor to keep in mind is Shiba Inu's circulating coin supply, which is currently 589 trillion. This is a massive number, and the biggest reason why Shiba Inu is still trading at such a low price. Dividing any market cap number -- no matter how big -- by an unfathomably large number like 589 trillion will always give you a very, very small number. It's just simple mathematics.
Image source: Getty Images.
For example, if Shiba Inu were ever to reach the $1 price level, it would imply a market cap of $589 trillion based on the current supply. That's a ridiculously large number, given that the total market cap of the entire crypto market is just over $1 trillion today.
Moreover, think about a market cap comparison with Apple (AAPL -0.75%), currently the world's most valuable company. In June, Apple hit a market cap of $3 trillion. So, even if you think that Shiba Inu is just as valuable as Apple, this would require the total circulating coin supply of Shiba Inu to shrink by 99.5%, in order to bring it down to 3 trillion.
Granted, Shiba Inu has embarked on a number of coin burning campaigns in order to bring down the total circulating supply. But, as seen in the examples above, even removing tens of billions of coins from the circulating supply is really just a drop in the bucket.
Utility
The other big factor for Shiba Inu involves "utility." This is a popular crypto buzzword to describe a crypto that actually has real-world value. In all fairness, it is possible to use Shiba Inu for some online payments, so that is a form of utility. For example, you can now pay for some airline flights with Shiba Inu. And, if you're a crypto millionaire, some Gucci stores in the U.S. now accept Shiba Inu. But those are really just outlier examples. You can't, for example, go to your local supermarket and pay with Shiba Inu.
The real utility for Shiba Inu is a new project called Shibarium. This is a Layer 2 blockchain that is designed to make Shiba Inu run faster and more efficiently. The goal is to bring down transaction fees, improve overall efficiency, and make it more attractive to develop on the Shiba Inu blockchain. The ultimate goal is to have hundreds of new projects, including new metaverse and Web3 projects, helping to create new value for Shiba Inu.
From my perspective, the upcoming public launch of Shibarium is the primary growth catalyst for Shiba Inu. Right now, Shibarium is still in test mode, with the official launch now expected to be sometime in mid-August. If Shibarium can announce a few big partnerships early, that could be a big win for Shiba Inu. Moreover, a new coin burning mechanism will likely be included as part of Shibarium, which should help with the coin supply problem. Every time a new transaction takes place on the blockchain, a small amount of Shiba Inu will be removed from the total supply.
Is there a path to $1?
Investing in Shiba Inu now is a highly speculative endeavor. While some short-term upside momentum might be possible with the launch of Shibarium, the long-term future of Shiba Inu will always be determined by its coin supply. Until Shiba Inu can find a way to bring its coin supply down to a reasonable level, it's mathematically impossible for the price of Shiba Inu to reach the $1 mark.
Keep in mind, too, that the market for meme coins is very crowded right now. When Shiba Inu originally launched in 2020, it did so primarily with Dogecoin (DOGE) as its only competition. But now there are many different dog-themed meme coin competitors. Add in the fact that many crypto speculators seem to have moved on to Bitcoin Ordinals, and I'm highly skeptical about any sort of super-rally that would send Shiba Inu soaring to the $1 mark anytime soon.
