Is the Securities and Exchange Commission's approval of spot Bitcoin (BTC -2.38%) exchange-traded funds (ETFs) earlier this year reviving the cryptocurrency market's animal spirits? It certainly seems that way, as suddenly Shiba Inu (SHIB -5.38%) is catching a wave of attention and an influx of trading volume.
Clearly, the joke's on the short sellers who pegged Shiba Inu as nothing more than a meme token. In a crypto-centric version of March madness, press coverage of the ETF approvals and the Bitcoin halving event later this year have smaller tokens like Shiba Inu riding Bitcoin's coattails to surprising heights.
With that, dreams of Shiba Inu at a full penny beckon, and it might feel like the only direction is up. Yet, altcoin holders should remember that great risk accompanies great potential rewards -- and getting Shiba Inu to one cent is much easier said than done.
Community over utility
Bitcoin, as you might expect, is getting the lion's share of the attention as the crypto winter transitions into a scorching spring. However, if you're in the market for a token with the greatest potential for utility, Bitcoin might not be your first pick; Ethereum or Ripple would probably fit the bill better.
Like Bitcoin, Shiba Inu doesn't have obvious, immediate use cases outside of the sphere of investing. Ethereum's network is useful for building blockchains for other altcoins, while Ripple is seemingly ready-made for banks and international remittances. What's the use of Shiba Inu, though?
Just because Shiba Inu isn't just a joke token anymore, that doesn't mean it's not fun. The Shiba Inu community, which centers around Shiba's official X feed, offers a centralized hub of activity even if the whole point of crypto is to be decentralized.
When Shiba Inu recently cracked the top 10 in cryptocurrency market cap, the #ShibArmy celebrated. If Shiba Inu gets listed on an exchange, in-the-know participants will hear about it.
Truly, what holds Shiba Inu's loyal fans together is the pride in Shiba's underdog status. Thus, if anything can get Shiba Inu closer to $0.01 (it now trades for about $0.000034), it's the rising tide of Bitcoin plus the active community surrounding Shiba Inu.
The never-ending roller coaster
Earlier this week, Bitcoin made the headlines when it edged above its prior all-time high. Less well publicized, however, was Bitcoin's subsequent 10% decline a few hours later.
Like an owner walking his dog, Bitcoin dragged Shiba Inu in both directions. Ill-timed traders might have learned a harsh lesson in altcoin volatility if they got in at $0.000045 and panic-sold Shiba Inu at, say, $0.000027.
Then, there was the exchange-specific flash crash in which Shiba Inu dropped from $0.000044 to $0.000022 on Coinbase. This should serve as a stark reminder that even big crypto exchanges can't necessarily shield altcoins from price-discovery hiccups.
In other words, there's no getting off the roller coaster until you fully liquidate your Shiba Inu tokens. The Shiba community might emphasize fun, but a strong stomach is required if you're going to HODL (crypto lingo for "hold") a nano-priced coin like Shiba Inu.
Additionally, starry-eyed investors should do the math before betting on a full penny for Shiba Inu. Even if Bitcoin mania propels Shiba Inu to $0.00005 in the near term, the token would have to make a 200-fold move to reach one cent.
Plus, there would be plenty of volatility and huge price swings along the way. Would you really be willing and able to tolerate multiple 50%-or-greater price retreats? And, would you throw in the towel if Shiba Inu falls prey to more exchange-specific flash crashes?
It's fine to buy and hold Shiba Inu while it's below a penny as long as you accept that it's going to be a sub-penny token for quite a while. This, along with proper position sizing to buffer the blow of dizzying declines, will enable you to HODL Shiba Inu with a due sense of community and confidence.
