In 2021, there was probably no single asset that performed better than Shiba Inu (SHIB 1.97%). Its price absolutely skyrocketed through the first 10 months of that year, benefitting from a generally strong year for risky assets.
But as of this writing, the dog-themed cryptocurrency sits 91% below its all-time high. It appears as though investors have lost excitement for the once high-flying Shiba Inu.
Does this mean that now is a good time to buy the dip? Here's why I think that's a poor decision.
Lack of utility and adoption
Unsurprisingly, investors have usually viewed cryptocurrencies through the lens of financial speculation. And it makes sense why. These digital assets can surge in value in no time, making the bold and lucky rich quick. Shiba Inu once perfectly fit this description.
But eventually, the real test of a cryptocurrency is whether it can bring about utility for people in the real world. If it can't, then over the long run, it's likely to slowly and steadily lose value and become irrelevant.
This might be the case with Shiba Inu. To be fair, it has become the 19th most valuable blockchain network in the world, but I just don't see any progress when it comes to adoption. Only 790 merchants globally accept Shiba Inu's token as a method of payment. And according to a report from venture capital firm Electric Capital, Shiba Inu doesn't even crack the list of top 100 cryptocurrencies in terms of the number of developers working on advancing it. This is not a good place to be, especially when thinking about long-term viability.
I struggle to understand why any cryptocurrency user or developer would be drawn to Shiba Inu when they can focus on blockchains that have a lot more promise. This list includes Ethereum, Cardano, and Solana, for example. They all have greater potential to introduce decentralized applications than Shiba Inu.
CRYPTO: SHIB
Key Data Points
Missing the boat
As of Nov. 21, the overall cryptocurrency market has gained about 75%, going from a value of $800 billion at the start of the year to $1.4 trillion now. The most valuable digital asset, Bitcoin, has also soared 125% this year. This rise coincides with a strong year for the stock market, as the tech-heavy Nasdaq Composite index has climbed 36% in 2023.
These gains are discouraging for Shiba Inu supporters. The meme token has barely budged this year, up only 0.6%. The fact that Shiba Inu hasn't participated at all in the broader crypto market's rally is a worrying sign. In what other market environment can investors expect it to do well if can't even rise during a strong bull market for risky assets?
I believe this recent price action is a clear indication that interest in Shiba Inu has not only fallen off a cliff, but that the chances of optimism and enthusiasm replacing the pessimistic tone are slim to none.
Too many tokens
Basic economic theory tells us that if the demand trends outpace supply growth, the price of an asset should increase over time. This is exactly what has happened with Bitcoin. Its fixed-supply cap of 21 million has been met with stronger demand from the investment community.
The same thing isn't happening with Shiba Inu. Right now, there are a whopping 589 trillion tokens outstanding, an amount that the founders intentionally created to target abundance over scarcity. It's really difficult to see this gargantuan supply help to support a higher price for Shiba Inu.
While it might be tempting to want to buy Shiba Inu on the dip, it's best to avoid this crypto like the plague.
