There are thousands of meme coins in the crypto-verse. They feature everything from the original Shiba Inu pup to politicians and penguins. However, only a couple, including Dogecoin (DOGE +4.36%) and Shiba Inu (CRYPTO: SHIB), have market caps of more than $2 billion and real chances of standing the test of time.
Take Shiba Inu, which launched in 2020. Its price may be down more than 90% from its all-time high, but the project is still on crypto investor radars. That's largely because it has a loyal following -- dubbed the Shib Army -- who keep the dream alive. To be clear, I don't think it is a good investment. However, it doesn't need to be a good investment to stay around.
Image source: Getty Images.
Don't underestimate the power of community
It is easy to dismiss meme coins for their lack of utility. That somewhat misses the point: Utility is almost an afterthought with meme coins like Shiba Inu. Instead, they build communities around being accessible and fun. Brand recognition and a sense of belonging are both powerful forces.
CRYPTO: SHIB
Key Data Points
Shiba Inu has more than 825,000 followers on X and an active Reddit community. Those are what help keep Shiba Inu in the top 50 cryptos. It hardly seems to matter that people barely use its ShibaSwap decentralized exchange and its Shibarium Layer 2 suffered a security breach in September.
If you're wondering how big that community is, at points during its 2021 glory days, Shiba Inu had more than 100,000 active addresses, per Glassnode data. During the past year, ignoring the occasional breakouts, that figure has hovered around 3,000 and 4,500. That shows people are holding onto their Shiba Inu -- even though the price has fallen almost 75% in the past year.
For context, we can look at Chainlink (LINK +5.63%) -- a coin with utility and a much higher market cap. Outside of a couple of dramatic blips, the number of active addresses has ranged from 2,500 to almost 10,000 so far this year.
Shiba Inu isn't going anywhere anytime soon
The Shib Army gives the coin staying power. However, even the most loyal community will eventually fade without some positive developments. Here are two recent pieces of news that could give it a near-term boost:
- Potential ETF inclusion: Shiba Inu was one of the eligible cryptos in T. Rowe Price's (TROW +1.01%) Active Crypto ETF application dated Oct. 22. That doesn't mean it will buy Shiba Inu, but it might -- assuming the filing gets SEC approval.
- Coinbase Markets will offer Shiba Inu derivatives trading: On Dec. 12, U.S. customers will be able to access perpetual futures (perps) for Shiba Inu and several other altcoins. Unlike traditional futures contracts, perps don't have an expiration date which gives traders greater flexibility.
There are better places to put your cash
Anything can happen in cryptocurrency. It is still a relatively new and high-risk asset class that could collapse. Putting aside doomsday possibilities, there's a good chance that Shiba Inu will remain in the top 100 cryptos for some time to come. However, if you have money you want to invest, it's worth considering projects with better long-term potential.
For example, the granddaddy of cryptos, Bitcoin (CRYPTO: BTC), has attracted a lot of institutional and corporate attention in recent years. If you're looking for a cryptocurrency with a future, Bitcoin could underpin digital payments. It dominates the industry right now and may become a form of digital gold. Sure, it is volatile. But -- unlike Shiba Inu -- it has always erased its losses and gone on to set new highs.
It's also worth considering the cryptocurrency ecosystems where meme coins get built, such as Ethereum (ETH +0.47%) and Solana (SOL +4.80%). Shiba Inu was built on the Ethereum blockchain. A lot of the more recent meme projects used Solana because its transaction costs are lower. Known as smart-contract, or programmable cryptos, these are the engine behind stablecoins, meme coins, decentralized applications, and more. As mainstream use cases for blockchain develop, smart-contract cryptos will play an important role.
I wrote recently about some of the challenges Shiba Inu faces. Ultimately, it's likely to limp along for some time to come and the Shib Army will keep marching. However, it's unlikely the price will ever come close to the high it reached in 2021.
