It goes without saying that Shiba Inu (CCC:SHIB-USD) is a gamble, pure and simple. Skeptics of this asset class may say all cryptocurrencies are gambles in one way or another. But unlike the major coins, like Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD), you can’t even try to argue that this coin, riding on the coattails of Dogecoin (CCC:DOGE-USD) has any sort of intrinsic value.
The “bull case,” for lack of a better word? It hinges on a return to the speculative frenzy seen with crypto during the spring. Yet, there is a chance we see at least a partial return to the enthusiasm seen earlier this year.
Bitcoin, Ethereum, and the largest altcoins have been trending up once again. Forthcoming upgrades among major coins could be something that extends this recovery. So, if its the high-utility coins that have improving prospects, what’s the value of buying SHIB-USD?
It may not fully recover to its high water mark (more than six-fold above where it trades today). But given its low-price, and lower levels of liquidity, it could make an outsized move higher, if the crypto market continues to make a comeback. This may more than outweigh the risk this “jokecoin,” that makes Doge look like serious business, continues to decline in value.
Shiba Inu and its Possible Outsized Moves Ahead
Sure, so far, SHIB-USD hasn’t gotten much of a boost, despite the major coins starting to bounce back. Yet don’t take that to mean it won’t start moving in tandem, or outsized, relative to the overall cryptocurrency market. The rebound (assuming it continues) is just now getting started.
Factors such as the upgrades for Bitcoin, Ethereum, and Cardano (CCC:ADA-USD) could convince investors that crypto is still the start of something big, instead of a passing fad. As prices continue to rise, and early movers reap fast profits, more cautious trend-followers could jump back in as well.
Crypto may not get back to the “bubble mode” it experienced earlier this year. But just like how the “meme stocks” trend saw a second speculative wave in late May/early June, cryptos could as well a few months down the road. So, how will this lead to higher prices for Shiba Inu?
If it finally becomes available for trading on Coinbase (NASDAQ:COIN), expanding its pool of possible buyers, and speculative fever partially gets back to prior levels? We could see this “jokecoin” make parabolic moves (albeit likely less dramatic than before) once again.
What May Prevent a Rebound Scenario From Happening
Again, I’m not saying Shiba Inu has a shot of rocketing back to its high water mark. Much less, make its way to a penny, which would be a more than 1600-fold gain from today’s prices. Yet compared to the risk it erodes further in value? The potential gains from a partial recovery (2x or 3x what it trades right now) may mean risk/return is in your favor.
Don’t take this to mean that buying SHIB-USD today is like free money for the taking. The aforementioned “crypto rebound” scenario on the heels of upgrades may not play out. Thankfully, proposed amendments to the “crypto tax” provisions of the infrastructure bill making its way through the U.S. Congress may have less of a negative impact as initially believed. Yet, there are other factors that could cause cryptos to fall further, or at least fail to rally again. Even with the upgrade catalyst.
For one, the upgrades could be met by market participants with a yawn. Improvements to Bitcoin, Ethereum, and the altcoins may make them more compatible for DeFi (decentralized finance). But if DeFi fails to catch on beyond the niche currently active in it, who’s going to care?
Another factor could indirectly impact cryptocurrencies: if the stock market corrects. The correlation between crypto and the stock market is up for debate. Yet if things go from risk-on to risk-off for stocks, don’t expect many to dive into Bitcoin, Ethereum, Dogecoin, much less Shiba Inu as a safe harbor.
If You Want to Gamble on a Crypto Recovery, Go Ahead and Buy SHIB-USD
A crypto recovery may not be set in stone. But it’s certainly something that could play out in the latter part of 2021. Upgrades could help spark a “second wave” of crypto bullishness. This rising tide may be something that raises the boat of SHIB-USD. Even if it only partially rebounds, the potential returns could outweigh possible.
Other factors may point to further losses, or perhaps just middling performance for cryptocurrencies. Yet if you want to take a gamble this asset class recovers? There’s no harm in making a high-risk, but possibly high-return wager on Shiba Inu.
On the date of publication, Thomas Niel held long positions in Bitcoin and Ethereum. He did not have (either directly or indirectly) any positions in any other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.