There might not be a more speculative cryptocurrency out there than Shiba Inu (SHIB -2.87%). Some market participants are strong supporters of its future prospects, while others think it's useless and an outright scam.
Whatever your perspective may be, Shiba Inu has still been a winner for those bold enough to have bought in at the launch more than three years ago. And that's considering this digital asset is currently sitting 90% below its highest-ever level.
But let's turn our attention to a lofty target. Will Shiba Inu one day reach $1 per token? The answer might shock you.
Negative characteristics
Shiba Inu could benefit from some potential catalysts that could drive its current price of $0.000009146 to new heights. This is a blockchain network that's built on top of Ethereum, so it has functionality for smart contracts and decentralized applications. In theory, greater usage of the network can push up demand for Shiba Inu tokens, thus supporting a higher price.
The recently released layer 2 solution, known as Shibarium, has many believers thinking Shiba Inu could become more prominent in the world of gaming, decentralized finance, and the metaverse. It's important to watch for any growth in these areas.
Naturally, you might ask, what is Shiba Inu's right to win? In other words, why does this cryptocurrency deserve to become a more valuable network over time?
These questions are particularly important, considering that Shiba Inu competes with Ethereum, Cardano, and Solana. All three of these networks have much greater developer activity, raising the chances that they'll succeed over the long term by introducing real-world use cases that people find compelling. You'd struggle to find valid arguments to support the case that Shiba Inu has a right to win.
It's also worth mentioning that Shiba Inu was created during the crypto bull market in the second half of 2020. Consequently, critical minds may be wondering if this token would even be able to have a successful launch in today's less-frothy market environment.
An impossible outcome
To be clear, I believe there's almost zero possibility for Shiba Inu to get to $1 per token. And that bluntness is probably what will surprise most readers. However, the thinking behind this is pretty straightforward.
A $1 price target translates to an astronomical 109,000-fold rise from today's prices. That type of gain seems ridiculous.
It's even wilder when you consider that there are a whopping 589 trillion Shiba Inu tokens in circulation. Therefore, a $1 token value equates to a total network value of $589 trillion. That's almost 200 times greater than the market capitalization of Apple, the world's most valuable company. And it's roughly 21 times more than the annual gross domestic product of the United States.
Unless there is hyperinflation -- a draconian situation in which major currencies across the world, including the U.S. dollar, devalue significantly, causing asset prices to skyrocket by comparison to a weaker dollar -- there's no chance Shiba Inu gets to the $1 mark. Of course, the world would have much more important issues to deal with if we see hyperinflation on a grand scale.
Some Shiba Inu bulls might point to the ongoing strategy of burning coins to decrease the token supply. For simplicity's sake, this is akin to a company repurchasing its shares. The hope is that a lower outstanding supply can support a higher price.
However, not nearly enough coins are being burned. At the current annualized pace of 3 trillion tokens, it would take about 98 years to cut the outstanding supply in half. Betting on coin burning to have a meaningful impact is a weak argument.
This gives me confidence that $1 per token is completely out of the question.
