The cryptocurrency market had a monster year in 2023, as its market cap skyrocketed from about $800 billion to $1.6 trillion as of Dec. 31. There is certainly some renewed interest from investors when it comes to digital assets.
One of the most speculative, unsurprisingly, is Shiba Inu (SHIB 0.29%). Although the token is currently below its all-time high, it has done a wonderful job rewarding investors in the last few years, rising over 45,000% since February 2021.
The dog-inspired cryptocurrency's most bullish supporters likely have their sights set on a bigger milestone. Can Shiba Inu hit $0.01 by the end of this year?
Image source: Getty Images.
Missing the boat
I just touched on how much the overall cryptocurrency market has surged in value since the start of last year. This benefited many of the most popular digital assets, like Ethereum and Solana.
Even the stock market had a wonderful year, as both the S&P 500 and Nasdaq Composite indexes were up double digits in 2023.
Among all of the bullish fervor, Shiba Inu seems to have underperformed relative to peers. The token only rose by about 31% last year. To be fair, that's a respectable gain, but it's probably not as good as what many had hoped would happen.
Shiba Inu feeds on driving stronger support from its community of followers. The fact that it wasn't able to outperform the broader crypto industry, or even match its gain, might be indicative of waning interest, and that doesn't bode well for its future.
Show me the edge
Throughout their short history, as an asset class, cryptocurrencies have been characterized by risky and speculative behavior. In other words, it's been more about financial gains than real-world utility. But I think over the long term, a cryptocurrency's ability to gain adoption will be the ultimate driver of its success.
With this framework in mind, one has to ask if there's really any purpose that Shiba Inu serves. It's built on the Ethereum network, which makes it compatible with numerous applications, exchanges, and wallets out there. That's a positive sign.
However, you have to wonder what would incentivize users or developers to want to direct their money or talent to Shiba Inu, when it might be much more valuable to focus on Ethereum, for example, which has more resources and a greater chance of long-term survival. This makes me question Shiba Inu's ultimate viability.
An unlikely outcome
If Shiba Inu somehow hit one penny per token by the end of 2024, it would probably create some millionaires in the process. That's because based on the current price of $0.000009067 (as of the evening of Feb. 1), reaching $0.01 translates to a monster gain of more than 110,000% in about the next 11 months. I view that as an extremely unlikely scenario.
And the numbers just don't make sense. There are currently 589 trillion Shiba Inu tokens in circulation. At a price of $0.01 per token, the entire blockchain network would carry a market cap of roughly $5.9 trillion.
This hypothetical value would make Shiba Inu worth more than some of the most successful and profitable enterprises on the face of the planet, like Apple or Microsoft. Could a dog-themed meme token that lacks utility really be worth more than two tech titans that sell some of the most popular hardware and software in the world? I don't think so.
Investors hoping Shiba Inu reaches one penny not just in 2024, but ever, should seriously temper their expectations.
