There is definitely no shortage of critics out there questioning the purpose of the entire cryptocurrency industry. However, that hasn't put off speculators that were bold enough to take risks and had the stomach to handle volatility to achieve monster returns.
Just look at Shiba Inu (SHIB +0.88%). This meme token's price is up an unbelievable 97,000% in the past five years (as of Feb. 16). But it trades 93% below its record from October 2021.
Could buying Shiba Inu today set you up for life?
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Level-setting the targeted outcome
When looking for an investment opportunity that can set you up for life, you're probably thinking about an outcome in the neighborhood of a 100-fold gain. If it takes 25 years to get there, the result is a fantastic 20% annualized rate of return. This would certainly outperform the stock market's average gain of about 10%.
If Shiba Inu's market cap, for instance, rose by a factor of 100, this means the coin's market value would equal $380 billion. This is roughly the same valuation as notable companies like Home Depot, Bank of America, and Procter & Gamble.
CRYPTO: SHIB
Key Data Points
The bears have a stronger argument
I believe there's an extremely low probability that Shiba Inu can set investors up for life. There are three reasons.
The first comes down to utility. Yes, there's a Shiba Inu metaverse, decentralized exchange, and Layer-2 scaling solution to handle increased usage. But there are cryptocurrencies out there with deeper developer networks that should do a much better job attracting users interested in these things. Eventually, digital assets will have to prove that they have real-world use cases.
Besides serving as a tool that satisfies the need for financial gains, there's no problem that Shiba Inu solves. There's nothing stopping market participants from gravitating to any shiny new digital asset that pops up.
Another reason Shiba Inu's price doesn't have long-term upside is because the one factor that propelled it in the past, community enthusiasm, appears to be weakening. This is evidenced by Shiba Inu's price trading so far off its peak. It looks like the best days are in the past. Investors should not be allocating capital to something built on unpredictable hype cycles.
The last reason boils down to competition for capital. Investors who want big returns don't have to risk their hard-earned savings on an extremely risky meme coin. There are safer cryptos to buy, like Bitcoin, if you want exposure to this market. There are many tech stocks and growth stocks to consider as well within the equity arena.
Buying Shiba Inu today is not going to set you up for life.
