For the year, meme coin Shiba Inu (SHIB 0.46%) is down 59%. Of even more concern, Shiba Inu is down a whopping 90% from its all-time high in October 2021.
If you're expecting a stunning reversal of fortune for Shiba Inu, it may be time to rethink your assumptions. Here's why.
Shiba Inu's coin supply problem
The core problem with Shiba Inu is its coin supply. Simply put, there are too many Shiba Inu coins to go around. The current circulating supply is 589 trillion coins.
Image source: Getty Images.
By way of comparison, the total circulating supply of Bitcoin (BTC +0.26%) is just 21 million coins. There's a good reason why Bitcoin has soared to a price near $100,000 while the price of Shiba Inu has tanked to a price of just $0.000008.
It's just the Law of Supply and Demand. If you shrink the coin supply, and demand remains constant or increases, the price is supposed to go up.
Admittedly, Shiba Inu has taken steps to shrink the coin supply. But it's nearly impossible to burn hundreds of trillions of coins in one fell swoop. As a result, Shiba Inu has almost zero possibility of ever hitting the $1 price point. Doing so would imply a market cap of $589 trillion!
Shiba Inu is no longer best in class
There's another big problem with Shiba Inu -- it's no longer the top dog-themed meme coin. At one time, the only real competitor to Shiba Inu was Dogecoin (DOGE +0.72%), the original dog-themed meme coin.
CRYPTO: DOGE
Key Data Points
However, the entire dog-themed meme coin concept has exploded in popularity, and even among the top 100 cryptocurrencies, there are other rival dog-themed meme coins. In addition to Dogecoin, there's also Bonk (BONK 0.67%) and Floki (FLOKI +0.22%). Beyond the top 100 cryptocurrencies, there are plenty more to choose from, with all of these meme coins riffing on the avatar of a cute, cuddly Shiba Inu dog.
On top of that, the broader animal-themed meme coin space has exploded in popularity, so it's not even certain that dog-themed meme coins are the way to go these days. There are cat-themed meme coins, penguin-themed meme coins, and frog-themed meme coins.
Don't get me wrong, there's nothing inherently wrong with dog-themed meme coins. For some people, they might represent a fun and entertaining way to learn about investing. But I wouldn't touch Shiba Inu with a 10-foot pole. The coin supply is simply too large, and there are just too many other cryptocurrencies out there with much higher future upside potential.
