Even though Shiba Inu's (SHIB 0.58%) price is currently 89% below its all-time high, it's understandable why some risk-seeking investors would still be interested in the cryptocurrency. The dog-themed digital token is up 82,000-fold in the last three years -- a monster return.
But I don't think this cryptocurrency makes for a smart long-term investment for some important reasons that I'll outline below. Instead, investors are better off looking at Bitcoin (BTC 0.30%). This magnificent crypto is ready for an incredible run, even more so than the one it's currently on.
A critical look at Shiba Inu
CRYPTO: SHIB
Key Data Points
It's not hard to find reasons to be skeptical of Shiba Inu and its long-term prospects. In fact, I wouldn't be surprised if this digital token loses money for investors over the next several years.
The first reason is that Shiba Inu has no competitive edge. Its founders purposely built it on top of the Ethereum network to increase functionality and adoption, but this hasn't been helpful. According to cryptwerk, Shiba Inu is only accepted at 792 merchants worldwide.
Some could argue that the introduction of the Layer-2 solution, known as Shibarium, will lower transaction fees and increase throughput. However, I don't see why developers or users would want to use Shiba Inu over Ethereum, which has a much longer operating history and a deeper developer network, making it a popular crypto for various decentralized apps.
The cryptocurrency industry's market cap has doubled this year, but the price of Shiba Inu is up just 16%. The failure to participate fully in this market's rally is a sign that investors might be losing interest. As a result, the hype is fading, which is what Shiba Inu has lived on historically.
Bitcoin's positive characteristics
CRYPTO: BTC
Key Data Points
Bitcoin's price has soared 60% in just the past three months and now sits just under $41,000. The momentum is certainly strong with the world's most valuable cryptocurrency.
But it's not too late to get in on the action. Investors should consider buying Bitcoin right now due to some catalysts that could lead to another incredible run.
In April 2024, the rate at which new Bitcoin is mined will be cut in half. This event, known as a halving, reduces supply production. And when coupled with rising demand, it can push up the price.
This has been the case in the past. In the few months leading up to a halving and in the months after it, Bitcoin's price has experienced a major upswing.
We also can't ignore the possibility of Bitcoin spot exchange-traded funds hitting the market. Numerous well-known asset managers, which combined oversee trillions of dollars, are trying to introduce these financial products. And they could bring lots of fresh institutional capital to Bitcoin. The optimism toward a favorable outcome could boost Bitcoin's price.
Bitcoin has attractive properties that make it a wonderful store of value. Probably the most critical aspect of this crypto is that there will only ever be 21 million coins in circulation. This known fixed supply is incredibly compelling, especially when you consider that the money supply of basically every currency in the world increases with each passing year.
Moreover, Bitcoin has better properties than gold -- namely, that it's easier to use for transactions, easier to transport, and more divisible.
Naysayers will say it's best to avoid Bitcoin because it's volatile. But there's no doubt that Bitcoin has done a wonderful job at increasing the purchasing power of its owners. Just look at a price chart of this asset since its initial launch more than 14 years ago.
This is a simple decision to make. Ignore Shiba Inu and fully turn your attention to Bitcoin. Your portfolio will end up thanking you.
