After a brutal year-long crypto winter, the cryptocurrency market seems to be ramping up for a potential bull run. With the total crypto market cap nearly doubling in 2023, there's a renewed sense of optimism throughout the industry.
Amid this resurgence, it's worth checking in on some of the top performers from the previous bull market, like the meme coin Shiba Inu (SHIB -5.46%). Just a few years ago it went on a monumental run, increasing by more than 28,000,000% in 2021. With things starting to pick up in crypto yet again, can Shiba Inu harness this newfound momentum and soar to the elusive $1 mark?
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Too little, too late?
Shiba Inu arrived in 2020, and now is the 17th most valuable cryptocurrencies today. While Shiba Inu was created as a meme coin, meaning that it lacks any real utility, the community and developers have diligently sought to alter this narrative over the past year.
In a bid to shed its meme coin status, Shiba Inu has undergone a transformation by integrating new functionalities that are commonly found among more established and valuable cryptocurrencies. Today Shiba Inu holders can engage in yield farming in which holders earn reward for locking up their crypto, acquire non-fungible tokens (NFTs), and participate in borrowing and lending protocols commonly found in decentralized finance (DeFi). There are even ambitious plans to launch a Shiba Inu-based metaverse, marking a significant departure from its meme-centric origins. However, despite these innovative strides, questions remain as to whether these endeavors are sufficient to alter Shiba Inu's trajectory.
Key obstacles persist
One of the most significant obstacles hindering Shiba Inu's makeover is the pivotal role of supply and demand dynamics. Especially in the crypto market, where speculation often is a key driver of price appreciation, an imbalance in supply and demand can be the nail in the coffin for a cryptocurrency -- and Shiba Inu might be sealing its own fate.
While widespread use cases often contribute to increased demand for cryptocurrencies like Bitcoin and Ethereum, Shiba Inu faces a substantial hurdle -- an enormous token supply of 589 trillion coins in circulation.
A supply of this size means that demand must be orders of magnitude larger to move the price. In recognition of this obstacle, Shiba Inu developers implemented a burn mechanism in early 2022 to try and reduce the supply. But it hasn't changed much. In 2023, 76 billion tokens were removed from circulation. That's just 0.0001% of all SHIB tokens in existence today.
Hitting the $1 mark
You can probably see where this is all going. In light of this imbalance, for SHibaInu to reach $1 would be virtually impossible. For it to happen, the token would need to increase by an astounding 9,816,570%. Admittedly, Shiba Inu has made jumps like this before, but a leg up of this size would be much more unlikely. If Shiba Inu were to reach a price of $1 per token, that would mean it would not only be the most valuable cryptocurrency, but would be worth more than the total world economy. Something tells me this obscure meme coin doesn't have what it takes to fetch that price.
Despite Shiba Inu's commendable foray into DeFi and other ecosystem expansions, its primary allure remains in pure speculation -- and it seems like the broader market is beginning to realize this. While the crypto asset class jumped by more than 100% in 2023 as household names like Bitcoin and Solana increased by triple digits, Shiba Inu saw its value increase by a measly 25%. For investors seeking exposure to the crypto market, there are better options out there. By all measures, this dog might have seen its last day.
