Thus far, 2023 has been a year to forget for Shiba Inu (SHIB 8.29%) investors. The popular meme coin is down 7% for the year, and has shown little sign of participating in a broader crypto rally that has seen Bitcoin soar 83% year to date.

Nonetheless, there's still talk of a potential end-of-summer rally for Shiba Inu. A big catalyst could be the imminent launch of Shibarium, a blockchain scaling solution that could unlock a tremendous amount of value and prepare Shiba Inu for its next stage of growth. With that in mind, here's a closer look at both the bull and bear cases for Shiba Inu. 

The bullish case

There is growing anticipation for the official public launch of Shibarium, which has been in test mode since March. Shibarium is a Layer 2 blockchain, meaning that it is a blockchain that essentially sits on top of the existing Shiba Inu blockchain. Conceptually, Shibarium is similar to the growing number of Layer 2 blockchains that sit on top of the main Ethereum blockchain, helping it to run faster and more efficiently.

Any improvement in speed or functionality made possible by Shibarium could be the key to unlocking new metaverse, gaming, and Web3 applications for Shiba Inu that simply aren't possible today. If the desired improvements to speed and efficiency take place as planned, Shibarium has potential to attract new developers and grow the size of the Shiba Inu ecosystem.

Shiba Inu dog.

Image source: Getty Images.

Perhaps even more importantly, a successful public launch of Shibarium might convince investors that Shiba Inu is more than just a silly meme coin. If Shiba Inu is really capable of supporting non-fungible token (NFT) marketplaces, metaverse gaming experiences, and new decentralized finance exchanges, that would make it a serious blockchain project. Instead of comparing Shiba Inu to other meme coins, investors would have to compare Shiba Inu to blockchains such as Ethereum, which has a $225 billion market cap. In short, a successful launch of Shibarium would require a much larger valuation for Shiba Inu, which could send the price of the token soaring. 

The bearish case

However, as I see it, there are a lot of "ifs" involved in that scenario. For one, there's no guarantee the Shibarium project is going to go live in August. There is still no official launch date. So it's quite possible that the Shiba Inu team will release additional details about the project at one of the upcoming blockchain events scheduled in August, but push back the official launch date until more testing can be done.

Secondly, it's not really known what's going to be built on top of Shibarium. Yes, there are plans for new metaverse worlds built on Shibarium. However, the showcase Shiba Inu metaverse project is still just a website to buy parcels of virtual land for an online experience to be determined later. Yes, there are plans for new NFT experiences, but that probably won't happen in earnest until the NFT market rebounds. Yes, there are plans to attract video gaming and entertainment companies, but on the main website for Shibarium, there is still no mention of big-time partners or supporters. So some of Shibarium might just be a lot of hype.

Finally, there is still the issue of Shiba Inu's coin supply. There are now 589 trillion Shiba Inu coins in circulation, making it very difficult to see any type of significant price appreciation until more coins can be "burned" (and thereby removed from circulation). This is simply a case of too much supply overwhelming the marketplace and keeping a lid on prices. While Shibarium is supposed to include a coin burning mechanism that removes Shiba Inu tokens from circulation with every transaction carried out on the blockchain, it might be a case of too little, too late. It's not an easy task to burn hundreds of trillions of coins.

Should you buy Shiba Inu?

While I certainly applaud the efforts of Shiba Inu to attempt the transition from meme coin to serious blockchain project, I have to side with the bears on this one. Most likely, Shiba Inu does get some sort of short-term bump in August as buzz begins to build around Shibarium, but I don't think this rally is sustainable. And that's especially the case if the official launch date gets pushed back.

For now, I'm bearish on Shiba Inu as a long-term investment opportunity. There are plenty of other low-priced cryptocurrencies that have far superior long-term growth prospects.