You would be hard-pressed to find a single asset that outperformed Shiba Inu (SHIB +2.45%) in 2021. Enthusiasm around the most speculative cryptocurrencies hit unprecedented levels, a bubble that popped faster than it started. As of this writing, Shiba Inu is 92% below its peak price.
Looking ahead, is it a realistic scenario for the price of one Shiba Inu token to reach $0.01? Based on today's price of $0.000006858, this implies an enormous gain of roughly 148,000%. While that would make some strong HODLers (crypto lingo for "holders) of this dog-themed digital asset wealthy beyond their wildest dreams, I think it's completely out of the question.
Here's why I don't think Shiba Inu will get to $0.01.
What's the point?
A valid argument can be made that there is simply no need for Shiba Inu. That might be too bold a statement for some people, but let me explain.
Zooming out a bit, some might even make the case that cryptocurrencies have no purpose. I wouldn't go that far, because there is some potential with this nascent and unproven technology. Bitcoin is trying to fix money altogether, which is inherently broken thanks to central banks constantly devaluing currency. And with its smart-contract capabilities, Ethereum aims to introduce newer use cases for specific applications. These have potential.
But I'm more skeptical about Shiba Inu. To its credit, it was created to take advantage of Dogecoin's lack of functionality, meaning that Shiba Inu is able to work with the entire Ethereum ecosystem. This should make it easily accessible to a wider range of users and developers.
This hasn't been the case, though. According to cryptwerk.com, Shiba Inu is only accepted as a method of payment at 778 merchants.
Shiba Inu might have caught on to become the 19th most valuable cryptocurrency because of its strong community of supporters, who probably view it more as a potential path to get rich than for any real utility in their day-to-day lives. But betting on community support to increase the price of the token isn't a sound investing thesis.
CRYPTO: SHIB
Key Data Points
On the development front, the introduction of Shibarium, a Layer-2 scaling solution that's supposed to help the network process faster transactions at lower costs, is something many supporters hope can take Shiba Inu to the next level. But I'm not convinced it can.
Cryptocurrencies benefit from having network effects. Consequently, the largest networks can provide the most value. Why would any developer or user flock to Shiba Inu's protocol when they can take their time, talent, resources, and money to Ethereum, for example?
I think on a long enough time horizon, Shiba Inu's value will ultimately go to zero.
The math doesn't work out
Even if you think the token can eventually hit $0.01, the numbers just don't check out. There are currently 589 trillion Shiba Inu tokens in circulation. At a penny per token, we're talking about a potential market cap of nearly $6 trillion. That's just ridiculous. It would account for more than 25% of the $27 trillion gross domestic product of the U.S.!
That valuation is more than double the current $2.8 trillion market cap of Apple, arguably the most successful enterprise of all time. If that sounds ridiculous, that's because it is.
To help get the token supply under control, there is a coin burning mechanism in place that sends tokens to dead wallets and gets them out of circulation. In the last 24 hours, 78 million Shiba Inu tokens were burned, translating to 28.5 billion on an annualized basis. Even over a stretch of time that spans decades, that rate isn't going to put a dent in the current token supply.
Let's face it. There's almost no chance that Shiba Inu gets to a penny.
