Without a doubt, Shiba Inu (SHIB -3.31%) probably had the best run in crypto market history. The token absolutely skyrocketed in the first 10 months of 2021. Certainly, some investors got rich very quickly.
But as of this writing, this digital asset, which ranks as the 17th most valuable in the world, is down more than 90% from its all-time high of $0.00008845 in October 2021. And now, investors might be eyeing Shiba Inu in the hopes of another rapid rise.
Can Shiba Inu reach $0.01 per token, amounting to a monster gain of 133,000% from today's price? Let's look at some factors working in its favor, as well as why I don't think this is ever going to happen.
Why it could happen
Perhaps, like every other cryptocurrency, the most important factor in Shiba Inu's favor is its community of supporters. Dogecoin, its inspiration, has seen public displays of support from the likes of billionaires Elon Musk and Mark Cuban. So, it's not crazy to believe that Shiba Inu was trying to ride its own hype cycle to prominence. The token's official Twitter account has nearly 4 million followers, a sign of the amount of attention it gets.
But Shiba Inu has one main advantage over Dogecoin, and that's the fact that it's built to be compatible with the overall Ethereum ecosystem. This means Shiba Inu's tokens can work with various wallets and exchanges, for example.
Shiba Inu has a potential catalyst on the horizon that could push up its price. Shibarium is a Layer-2 solution that's created on top of Shiba Inu's main network. The entire premise of this development is to reduce transaction fees and speed up settlement times. And by creating a more efficient blockchain network, maybe Shiba Inu can become a top cryptocurrency when it comes to decentralized applications, specifically for gaming and metaverse use cases.
Why it's not a likely outcome
Some might think that the bullish arguments that I laid out above are compelling enough to lift the price of the token to a penny over time. But I'm not so convinced.
To its credit, Shiba Inu does have a burning strategy in place to reduce its token supply. However, there are currently a whopping 589 trillion coins in circulation. A massive number of coins would need to be burned and removed from circulation to have any meaningful impact on the outstanding supply.
But if we assume that the price of one token does reach $0.01, and the circulating supply stays at its current level, this means the network's market cap would be $5.9 trillion. That's a ridiculously large amount, equal to roughly 25% of the total gross domestic product of the U.S.
For comparison's sake, this would make Shiba Inu more valuable than FAANG stocks like Apple or Amazon. Is it likely that Shiba Inu will be worth more than these dominant businesses that sell products and services that are essential to consumers and businesses? I don't think so.
And I just don't see a reason for the existence of Shiba Inu in the first place. Only 762 merchants accept Shiba Inu for payment, a minuscule number. Shiba Inu also seriously lacks when it comes to attracting developers to work on advancing its network. This doesn't bode well for its future.
There are now a bunch of other dog-themed meme coins out there competing for speculators' dollars. Besides Dogecoin and Shiba Inu, there's also Baby Dogecoin, Jindo Inu, and Alaska Inu.
For long-term investors who aren't trying to time the market and achieve a quick profit, it's better to turn your attention to Bitcoin or Ethereum, as these cryptocurrencies have much more potential. Therefore, investors should think twice before deciding to buy Shiba Inu.
