Can Shiba Inu Overtake Dogecoin?
Shiba Inu is nosing Dogecoin in the crypto charts.
Popular meme coin Shiba Inu (SHIB) has jumped over 1,000% since the start of October, making it one of the top 20 cryptos by market cap.
Indeed, it's now so close to Dogecoin (DOGE) -- the original dog-themed coin -- that it could almost bite its tail. DOGE has a market cap of $31.6 billion and is in 10th place, according to CoinMarketCap. At time of writing, Shiba Inu was in 11th place with a market cap of $30.4 billion -- about $1.2 billion behind its dad.
Shiba Inu and Dogecoin
Dogecoin was launched in 2013 as a joke to poke fun at the way people bought cryptocurrencies without really understanding them. It used the image of a popular meme of a Japanese Shiba Inu dog breed which spoke in broken sentences.
However, its fun-loving approach won a loyal community of followers who found an unexpected hero in Tesla's Elon Musk. Tweets from Musk and other celebrities pushed Dogecoin's price up. Dogecoin has grown over 5,000% since the start of this year, even though the coin didn't have any real utility. Dogecoin does now have a strategic roadmap and direction, but that's another story.
Dogecoin's success spawned a whole litter of other petcoins. These include Shiba Inu, Baby Doge Coin, and Daddy Doge. Shiba Inu does have a veneer of usefulness through its dog-themed decentralized exchange (DEX) called ShibaSwap. But sadly, ShibaSwap can't compete with established DEXs like Uniswap or 1inch because most of the activity on the site revolves around the SHIB token.
You can stake SHIB tokens (tie them up to secure the network and earn interest). You can also earn BONE tokens by adding liquidity (facilitate trading by committing your tokens to a trading pool). But beyond using SHIB to earn more SHIB-related tokens, you can't use it for much. And only 91 merchants accept SHIB as a form of payment while over 1,700 accept DOGE, according to Cryptwerk.
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What's behind SHIB's growth?
SHIB's price began to rise earlier this month when Elon Musk posted a picture of his new Shiba Inu puppy, which SHIB fans interpreted as an endorsement. However, Musk's subsequent tweet that he did not hold the coin put a temporary damper on SHIB's growth spurt.
The main driver behind its current upward trajectory is a Change.org petition to get Robinhood to list the coin. Over 366,000 people have signed the online campaign and speculation that this top cryptocurrency broker might list SHIB has fueled its dramatic growth. In its Q3 earnings call, Robinhood CEO Vlad Tenev said the company would carefully evaluate adding any new coins to ensure it stayed in line with regulatory requirements.
Will Shiba Inu continue to climb?
Shiba Inu has just hit an all-time high, and its price may continue to rise. If it does, there's a chance it can overtake Dogecoin. But the better question is, should you buy it?
It is always dangerous to buy a coin just because the price is rising and you're scared of missing out. The price could just as easily fall, and investors who buy today would then lose money.
In addition to its lack of utility, Shiba Inu raises a few red flags. For example, its founder is anonymous. If you're going to invest in a project, you want to know who is running it and what experience they have. Also, data from Etherscan shows that over 80% of all SHIB is owned by the top 100 accounts. That means smaller investors will have to ride the waves made by those Shiba Inu whales.
Now, some people argue that common sense investment rules don't apply to the new world cryptocurrencies. After all, Dogecoin nosed its way to the mainstream in spite of its lack of real-world applications.
But be aware that while people have made money from these speculative investments, they've lost it as well. It's true that if you'd bought $1,000 of Dogecoin at the start of the year, it would be worth over $50,000 now. But if you'd bought $1,000 around its all-time high in May, you'd only have around $350 worth of DOGE today. And if you'd bought into one of the many coins that have already failed, you would be left with nothing.
Here at The Ascent, we encourage long-term investment based on research and fundamental value. This means avoiding short-term speculative plays like Shiba Inu. Cryptocurrency investment is already risky enough -- it is a relatively new industry and there are many things we don't know about how it might play out.
So instead of pet coins like Shiba Inu, why not look at other cryptocurrencies that are more likely to perform well in the long term? There are several with plenty of real world utility that have already outperformed Dogecoin, and will likely outperform Shiba Inu as well.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
Emma Newbery has no position in any of the cryptocurrencies mentioned.