Although it's been an extremely volatile ride, since its launch more than three years ago, Shiba Inu (SHIB +0.68%) has produced a monumental return. Even investors in the most successful stocks would be jealous.
But it's been a disappointing story more recently. This digital asset currently sits 88% below its all-time high.
Is now a good time to buy this dog-themed cryptocurrency while it's down? Here's what investors should know about Shiba Inu.
Understanding Shiba Inu
As of this writing, Shiba Inu is the 16th most valuable blockchain network in the world, with a market value of $6 billion. Its founders designed it to take advantage of Dogecoin's success, but they also wanted to make it more functional to increase utility and adoption.
Because of this, Shiba Inu was built on top of the Ethereum network, making it compatible with various exchanges and other decentralized applications. Moreover, Shiba Inu is structured to run smart contracts.
Adoption hasn't really taken off, though. This crypto is accepted as a method of payment at fewer than 900 merchants worldwide. And when it comes to developer activity, Shiba Inu doesn't even crack the top 100 blockchains. This doesn't bode well for its future, as the chances that utility will rise over time are low.
CRYPTO: SHIB
Key Data Points
Not a great showing in 2023
This year, the price of Shiba Inu has risen by about 13% (as of Dec. 18). To some investors, this might be viewed in a positive light. After all, a double-digit gain is still respectable.
However, this isn't the case when we look at equities. The S&P 500 and the Nasdaq Composite Index have climbed 43% and 24%, respectively, in 2023. These major indices have gotten a boost recently with the expectation of multiple rate cuts in 2024.
And in the world of cryptocurrencies, both Bitcoin (up 156%) and Ethereum (up 85%) have registered performances that crush what Shiba Inu has done this year.
You would assume that in a rosy and optimistic environment, with the overall crypto market gaining 100% in value in 2023, that one of the most speculative digital assets would have skyrocketed in value. This just hasn't been the case for Shiba Inu. I view this as a clear signal that market participants are losing interest.
Since it's a cryptocurrency that depends on hype cycles and fervent community support, this is not a good sign for Shiba Inu -- and it might portend tough times ahead.
Adopt a long-term mindset
Successful investing means thinking not about the next 12 months, but about the next five or more years. This long-term mindset forces one to think critically about a particular opportunity, while also focusing on the stuff that really matters.
In the same vein, how should we think about Shiba Inu? Does this digital asset really make for a smart investment over the next several years?
I honestly don't believe it does.
Compared to more promising cryptocurrencies, like Ethereum, Solana, and Cardano, Shiba Inu is simply inferior when it comes to adoption and utility. It's hard to find a competitive edge that Shiba Inu might have.
Plus, I'm unsure whether this crypto even solves a real-world problem that justifies its existence. This is in stark contrast to Bitcoin, for example, which is a decentralized digital monetary network that aims to fix the broken financial system. Viewed in this light, Shiba Inu appears to be an unnecessary meme token.
Investors are much better off completely avoiding this crypto.
