Looking back at the last five years, it's clear that we've lived through a unique time with many challenges. There was the COVID-19 pandemic, followed by macroeconomic headwinds like supply chain issues, surging inflation, higher interest rates, and now waning consumer confidence. These were all on top of investors' minds at specific times.
Through it all, cryptocurrencies have bounced around. But perhaps no token has generated wealth for its early adopters like Shiba Inu (SHIB +2.14%) has. If you'd invested $1,000 in this meme coin exactly five years ago, here's how much you'd have today.
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Shiba Inu's trailing five-year return is incredible, but it hasn't been a smooth journey
Let's say you were bold and smart enough to have purchased $1,000 worth of Shiba Inu tokens in mid-December 2020. That financial move would've resulted in a current balance of nearly $47 million, translating to a jaw-dropping gain of almost 4,700,000% (as of Dec. 15). During that same period of time, Bitcoin rose 313%. And Nvidia, the hottest stock on the market pushing artificial intelligence (AI) forward, saw its shares produce a total return of 1,220%.
Shiba Inu has outperformed some of the best assets out there. However, it's been an extremely volatile journey, to put it lightly. Shiba Inu hit its peak price in late October 2021, only to absolutely tank over the following eight months. It has experienced short bursts of market enthusiasm that can quickly drive up its price, but these hype cycles don't last very long. Shiba Inu currently trades 91% below its all-time high. And it's down 63% just this year. This isn't an encouraging trend, as it might mean that investors are losing interest in the dog-themed cryptocurrency.
Community might matter more than utility
Investors might be wondering if Shiba Inu presents a worthwhile opportunity, especially since it's trading significantly below its record. In other words, opportunistic investors, particularly those willing to take on more risk in their portfolios, might view Shiba Inu as a value play.
To be clear, I believe there is no chance Shiba Inu produces a similar return going forward. I also wouldn't be surprised if the cryptocurrency continues losing value, or at best remains close to its current market cap of $4.6 billion five or 10 years from now.
One of the biggest headwinds Shiba Inu faces is a lack of utility. The blockchain network barely has any active developers working on it, which drastically reduces the likelihood that compelling features are introduced. For what it's worth, Shiba Inu has a metaverse, a decentralized exchange, and a Layer-2 scaling solution. But usage is another story, with more popular cryptos like Ethereum, Solana, and Cardano getting a lot of the attention.
That doesn't necessarily mean that Shiba Inu is going away. It's currently the 24th most valuable cryptocurrency in the world. That position is a direct result of the SHIB Army, Shiba Inu's community of supporters. As long as there is any sort of interest from the public for a fun and light-hearted cryptocurrency like this, the market will keep voting with their dollars, attributing some value to Shiba Inu.
CRYPTO: SHIB
Key Data Points
Where should risk-seeking investors put their money?
Just because there is a community around it, it doesn't mean Shiba Inu is a smart buy today. This raises the question: Where should risk-seeking investors allocate capital today?
Within the wild world of crypto, Bitcoin is the best choice, especially since it's 32% below its peak right now. Bitcoin continues to benefit from heightened interest among governments, companies, and financial institutions. It's totally decentralized and has a fixed supply cap.
And investors will probably benefit by taking a closer look at certain artificial intelligence stocks. Putting aside the question of a market bubble, these companies are on the right side of a potentially major tech shift.
