Shiba Inu (SCHIB -8.41%) Considered one of the most intriguing and unexpected investment success stories in history. Started as a partial parody of Dogecoinswhich itself launched as Riff On BitcoinDuring trading in 2021, the SHIB cryptocurrency recorded gains of around 46,000,000% and generated fortunes for those who made random investments and sales. However, the token lost significant ground in the ensuing trade and is now around 86% down from the peak it hit in October last year.
What’s next for Shiba Inu? Read on for a look at the bullish and bearish dynamics that could influence the meme coin’s future performance.
SHIB could benefit from the next crypto bull market
The broader cryptocurrency market tends to be very cyclical in terms of pricing. Shiba Inu’s explosive rise coincided with the end of the last major crypto bull market, and subsequent sell-offs largely paralleled the market’s transition into a bearish phase. If the crypto market sees another strong run, SHIB has opportunities to trade well above current price levels.
Despite a large drawdown on its token price, Shiba Inu continues to have a large base of enthusiastic supporters. Brand strength can mean a lot in the crypto world, and SHIB is still the 12th largest cryptocurrency overall, with a market cap of around $7 billion.
The token’s supporter base — the “SHIB army,” as it’s sometimes called — continues to stand by the cryptocurrency and touts its potential as an investment. That hasn’t stopped the meme coin from seeing big sell-offs linked to trends impacting the broader crypto market, but it has given SHIB staying power even as new cryptocurrencies and meme tokens have been created.
If Shiba Inu retains its brand strength and dedicated community of supporters, the token could benefit from recovery momentum or another wave of meme-driven price gains. It’s also possible that gaming and metaverse projects tied to the token could boost adoption or boost prices by burning coins.
The token still looks incredibly risky
In a way, Shiba Inu was the ultimate never-to-say investment. Even after some steep sell-offs, the token is still around 22,000,000% above its 2020 price low. If the broader crypto market sees another strong bull run, it’s certainly not out of the question that the meme token will explode in its run. Still, there are reasons to be cautious, despite the cryptocurrency’s history proving doubters wrong.
While a metaverse using SHIB as its underlying token is being built and other burning initiatives are underway to reduce the total number of coins outstanding, Shiba Inu still looks like a fundamentally weak investment. SHIB’s main functions are as a speculative asset or currency. Despite its considerable brand strength and community of supporters and enthusiasts, the token is not significantly different from other ERC-20 tokens that function primarily as speculative investments or digital cash.
While it’s clear that Shiba Inu has captured the imagination and created excitement as a speculative investment, the case for the token being a viable currency looks pretty shaky. SHIB’s price is prone to large fluctuations in relatively short periods of time, and its use as a payment method means buyers and sellers are subject to significant fluctuations, even if the coins received by the seller are converted to fiat currency or stablecoins upon receipt.
Adoption by new users and investors could drive the price of Shiba Inu higher, but it seems unlikely that it will ever become popular with traders. That means its valuation is likely to continue to be driven by price trends in the broader crypto market and meme-oriented investors who may ditch the token in favor of the next exciting story.
Should You Buy SHIB Today?
Shiba Inu remains a speculative and relatively high-risk investment. For investors who see promise in the community behind the token, or who are willing to take a risk in search of potentially explosive gains, it’s possible that SHIB will find another triumph. However, unless you’re willing to risk losing a large percentage of your initial investment in the token, it’s probably better to look for cryptocurrencies and stocks that better align with your portfolio goals.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.