While Bitcoin (BTC -1.89%) continues to receive the lion's share of the attention in the financial media, in-the-know cryptocurrency fanatics also monitor so-called meme coins like Shiba Inu (SHIB -2.80%). The past couple of months have shown how low-priced tokens like Shiba Inu can make leveraged moves when Bitcoin rallies.
Of course, it works both ways, as a Bitcoin-price drop could precipitate a Shiba Inu coin crash. Nevertheless, traders with a speculative bent might consider putting a dog in the race with a modest position in Shiba Inu.
Two months can make a big difference
In mid-October, Shiba Inu fell to a short-term low of $0.000007 (give or take a few minuscule fractions of a penny), and dog-themed meme coins were scarcely mentioned in the financial press. Sure, Shiba Inu's official X (formerly known as Twitter) social media feed tried to keep the troops fired up for battle, but there wasn't much news to speak of in the crypto-verse.
In hindsight, that was the ideal time to pick up some Shiba Inu. Fast-forward to mid-December, and Shiba Inu had jumped to $0.00001 for a nearly 43% gain. Thus, a $1,000 investment would have turned into almost $1,430.
Unsurprisingly, interest in Shiba Inu surged in the wake of its price spike. The Shiba Inu community is happy to welcome new investors into the fold and educate them about the ins and outs of this fascinating digital asset.
Newcomers will certainly want to learn about Shiba Inu's Layer-2 development solution known as Shibarium. They'll also likely be surprised to discover that some Shiba Inu investors purposely destroy or "burn" their tokens to reduce the available supply.
These coin burns were done voluntarily and sporadically, but now the Shiba Inu community may be prepared to reduce its token supply in a more organized manner. According to the official Shiba Inu developers' blog, "Shibarium is introducing a transformative token burning mechanism" that's "designed to reduce token supply strategically, potentially increasing the token's value and benefiting its ecosystem." It will be interesting to see how this "mechanism" pans out and whether it actually ends up having a material effect on the Shiba Inu price.
Bitcoin's rising tide lifts all crypto boats
Although Shiba Inu's robust community and the prospect of organized coin burns are bullish factors, there's little doubt that Bitcoin's recent rise is what catalyzed the Shiba Inu rally of the past two months. Thus, investors can think of Bitcoin as being like gold while altcoins are like silver; Bitcoin is more expensive and more influential, and has the power to pull a smaller crypto coin like Shiba Inu in either direction.
Consequently, if you're planning to invest in Shiba Inu, you'd better keep an eye on the almighty Bitcoin. While you're at it, keep tabs on new developments in BlackRock's quest to get a spot Bitcoin exchange-traded fund (ETF) approved by the Securities and Exchange Commission (SEC).
Grayscale also wants to get a spot Bitcoin ETF approved for public trading, but BlackRock's clout and deep capital reserves make it seem like the horse to bet on in this race. Does it really matter which financial firm gets the approval first, though? Once those floodgates open, the genie will be out of the bottle and the flow of funds into the crypto market could be substantial.
Granted, it could be argued that the financial markets are forward-looking and have already priced a potential spot Bitcoin ETF approval into Bitcoin, altcoins like Shiba Inu, and practically anything else with a crypto connection. That's a reasonable assumption, but it wouldn't likely negate the rush of interest that the first spot Bitcoin ETF approval will surely cause.
So, don't invest too heavily in a volatile asset like Shiba Inu, but also don't assume that the rally is over. As tokens get burned and interest in Bitcoin grows, the rising animal spirits could soon push Shiba Inu closer to the holy grail of a full penny.
