Excitement is building in the crypto world again as the price of Bitcoin (BTC -2.19%) continues to climb, reaching a price of more than $69,000 on Tuesday, a new record. The cryptocurrency has surged as the approval of spot Bitcoin exchange-traded funds (ETFs) earlier this year has made it easier to invest in the digital currency.
It's not just Bitcoin that's doing well, either. Investors are being more bullish on crypto in general. Two popular meme coins that have also been generating impressive returns in recent months include and Shiba Inu (SHIB -5.26%)and Dogecoin (DOGE -4.13%). Is this a sign that meme coins are also back in the public eye, and are they safer investments to hold in your portfolio today?
Shiba Inu and Dogecoin have both outperformed Bitcoin
A good way to gauge the excitement of meme coins is to look at how well two of the most popular ones are doing in Dogecoin and Shiba Inu. The latter has more than tripled in value in just three months, while the former has risen about 50%, and Dogecoin was even higher before a recent pullback. Bitcoin, by comparison, has increased by about 40% over the same time frame.
Dogecoin and Shiba Inu are the 10th and 11th largest coins by market cap, respectively, due to their recent surges. And given their recent momentum, it's possible they could move even further up the list in the days and weeks ahead. When these meme coins get going, they can take off in a hurry. A large part of the reason for their recent rallies may trace to Bitcoin's already lofty market cap of more than $1.2 trillion. The market caps of Dogecoin and Shiba Inu combine for less than $50 billion; there's a lot more upside potential for these much smaller valued coins than there is for an already large behemoth in Bitcoin.
Trading volumes have spiked significantly
In addition to a sharp increase in price, trading volumes have also been up for these meme coins. In just the first few trading days of March, people have been trading more in Dogecoin and Shiba than they have in the previous week.
| Coin |
Average Trading Volume (March 1-3) |
Average Trading Volume (Feb 23-Feb 29) |
% Change |
|---|---|---|---|
| Bitcoin | 30.1 billion | 40.7 billion | -26% |
| Shiba Inu | 4.0 billion | 675 million | +493% |
| Dogecoin | 3.8 billion | 1.7 billion | +124% |
Source: Yahoo Finance. Calculations by author.
While there has been a slowdown in Bitcoin trading volume, there's been a particularly strong uptick in Shiba Inu and Dogecoin volumes, perhaps suggesting that investors have been transitioning to the smaller coins, which may appeal to investors amid more bullish crypto conditions.
Meme coins remain extremely risky
There aren't any significant catalysts to suggest that Shiba Inu and other meme coins should be rising significantly in value. As is often the case with crypto, speculation plays a big role in their rising valuations. While Bitcoin may benefit from halving and the approval of spot Bitcoin ETFs, Shiba Inu and other coins won't necessarily directly benefit from those developments. However, they can contribute to more bullish conditions in the crypto world as a whole, which is why the rising volumes and prices among meme coins may not necessarily be all that surprising, especially with Bitcoin trading at highs.
Meme coins definitely appear to be back and rising in popularity. But they remain incredibly risky investments, and unless you are OK with high volatility, they may not be suitable investment options today. Bitcoin is risky as well, but with it being the top cryptocurrency in the world and the most prominent one, it's a safer option for crypto investors.
