Cryptocurrencies are coming off a strong year in 2024, the total value of all coins and tokens in circulation having soared to a new record high of $3.9 trillion shortly after the U.S. presidential election in November. President Trump campaigned on a series of pro-crypto policies that could pave the way for new use cases and a fresh wave of value creation in the future.
Shiba Inu (SHIB 4.97%) and Dogecoin (DOGE 4.83%) ended 2024 with gains of 105% and 251%, respectively. They are two of the world's most prominent meme tokens, meaning they have typically been vessels for speculation with very little real-world utility.
Nevertheless, there is no denying their ability to deliver incredible gains, so which one could be the better buy in 2025? The answer might surprise you.
Image source: Getty Images.
The case for Shiba Inu
Shiba Inu delivered one of the best returns in the history of financial markets in 2021, when it soared by an eye-popping 45,278,000%. That would have been enough to turn a perfectly timed investment of $3 into more than $1 million.
But the rally was unsustainable because it was driven by speculation, so Shiba Inu lost more than 90% of its peak value by mid-2022. Unfortunately, the meme token still hasn't proven it has a real use case -- according to Cryptwerk, just 1,005 businesses accept it as payment for goods and services worldwide, and many of them are obscure providers of internet and crypto services or even online gambling houses. If consumers can't spend Shiba Inu at their favorite stores, there will always be a barrier to widespread adoption.
Developers have tried to make Shiba Inu more efficient as a payment mechanism to encourage people to use it. They launched a Layer-2 blockchain solution called Shibarium that eliminates some of the clunkiness associated with the legacy Ethereum network upon which Shiba Inu is built, making it faster and cheaper to transact with the meme token. Almost a billion transactions have been processed on Shibarium since it launched in 2023, but that's still a drop in the bucket considering consumers and businesses execute more than 3.4 trillion transactions annually.
Moreover, Shiba Inu has a major supply problem. There are 589.2 trillion tokens in circulation, which is why they trade at the tiny price of $0.000012. Simple math suggests that if Shiba Inu tokens rose to a more conventional price of $1 each, the cryptocurrency would have a mind-boggling market capitalization of $589.2 trillion. That would make it more valuable than all the wealth held by every person, company, and government on Earth, which stood at $454 trillion at the end of 2022 (according to UBS).
The Shiba Inu community has banded together to resolve the supply problem by "burning" tokens, which means removing them from circulation forever. The easiest way to do this is by sending them to a dead wallet where they can never be retrieved. In theory, the price of each Shiba Inu token should increase in proportion to the number of tokens burned, which could pave the way to $1 in the future (but there is a catch, which I'll highlight later).
CRYPTO: SHIB
Key Data Points
The case for Dogecoin
Dogecoin was the original meme token. It was founded in 2013 by two friends who literally used the "doge" meme as inspiration. But investors who joined the fun were laughing all the way to the bank years later, because Dogecoin soared to a peak market cap of around $90 billion in 2021.
Tesla CEO Elon Musk had a lot to do with that incredible run. He has supported Dogecoin since 2019 by posting memes and engaging with other investors on social media. But the hype surrounding his involvement reached fever pitch in May 2021, when he appeared on Saturday Night Live and participated in a Dogecoin-themed skit. The meme token reached a high of $0.73 during the show, which proved to be the top.
It lost more than 90% of its value by mid-2022, and it still hasn't fully recovered. Like Shiba Inu, Dogecoin has very little utility in the real world, so there is nothing other than speculation supporting its value.
That said, Dogecoin staged a powerful rally after the election last year, reaching a 52-week high of $0.47 in December. Investors were bullish on cryptocurrencies overall thanks to President Trump's promise to make America "the crypto capital of the world," but Dogecoin received an extra boost when he revealed Musk would play a role in the administration as an external advisor.
The president went on to establish the effort known as the Department of Government Efficiency (DOGE), which focuses on reducing wasteful government spending to bring down the national debt, and he appointed Musk to lead it. The acronym is a nod to Musk's favorite cryptocurrency, Dogecoin, which investors viewed as a clear sign of support.
However, there has been no indication so far that Dogecoin will play a role in the DOGE effort, and the hype appears to be fizzling out, as the token has fallen to $0.18 as of this writing.
CRYPTO: DOGE
Key Data Points
The verdict
As you have probably gathered, both Shiba Inu and Dogecoin are extremely risky investments because of their volatility and lack of utility. Nevertheless, I think Shiba Inu will have a harder time generating further upside for two reasons.
First, it has fallen out of the spotlight and there is no apparent catalyst on the horizon to bring speculators back into the fold. Second, despite a solid effort to resolve its supply issue, burning the necessary amount of tokens to justify a price of $1 could take thousands of years and won't necessarily result in positive returns for investors.
Don't get me wrong, Dogecoin has a supply issue of its own. There is a cap on how many new tokens can be issued each year, but there is no end date, which means an infinite amount of new tokens will be minted over time. However, one thing Dogecoin does have going for it is Elon Musk. While there is no guarantee he will help the community create value, his support does keep investors' attention on the meme token.
To be clear, that is a very flimsy reason to make an investment, and there is a high chance you will lose money if you buy Dogecoin today. That's why I recommend looking beyond Shiba Inu and Dogecoin entirely and perhaps buying Bitcoin instead because it does have the qualities to support long-term upside for investors.
Alternatively, given the volatility in the crypto market overall lately (even Bitcoin is down 22% from its record high), investors might want to consider buying stocks instead. Companies with consistent revenue and earnings streams could deliver more reliable returns over the long term.
