Investors hoping for a meme coin renaissance should wait a bit more, considering the latest news. Due to the price of Dogecoin (CCC:DOGE-USD) falling exponentially in recent weeks, Shiba Inu (CCC:SHIB-USD) is also falling.
For one thing, it shows the strong correlation between these two meme coins. While Shiba Inu is often referred to as the “Dogecoin” killer, but both of these coins are more similar than different, which is why the price trajectory is intertwined.
An anonymous individual going by the name Ryoshi created Shiba Inu in April to capitalize on the success of Dogecoin, which started as a joke between software engineers Billy Markus and Jackson Palmer. However, due to the broader crypto boom and the backing of Elon Musk, the coin has seen massive gains this year.
Investors who purchased DOGE at the right time laughed all their way to the bank. However, these meme coins simply don’t have a lot of use cases. Shiba Inu is looking to distance itself from this image. But investment is still more dependent on fear of missing out (FOMO) energy rather than developments.
Considering it’s still very inexpensive, you can still make double or triple gains due to the external catalysts at play in this space. If you are a day trader, this one will interest you, but it’s not the right coin to keep in your wallet for six months.
Short-Term Catalysts Will Push Up Shiba Inu
Several short-term catalysts have pushed Shiba Inu upward. Let’s break each of them down and understand what they mean for the coin.
Shiba Inu has been added to cryptocurrency exchange platform Coinbase (NASDAQ:COIN). It is a major development leading to a rise of more than 34% for the altcoin. Major analysts and investors believe the move, which will expose the coin to approximately 68 million verified users, will be a major growth driver for the business.
Another major piece of news that sent the coin upward was a tweet from Elon Musk. He shared a picture of ‘Floki,’ his new pet Shiba Inu, which sent the trading volume of the altcoin up 1,101%. It’s yet another example of social media hype and its effect on the price of altcoins.
These spikes are not based on fundamental strength or use cases. The worst part is that none of these rallies are sustainable, and no one can see them coming.
Shiba Inu investors who are rejoicing now should consider what happened with Dogecoin when Elon Musk made his “Saturday Night Live,” appearance earlier this year. Musk is the self-proclaimed “Dogefather,” but when he appeared on the show, he made a joke about the coin sending it into a tailspin.
There have been several other examples of these events, making investors wary of investing in meme coins. But it comes with the territory.
One of the main reasons meme coins continue to do well is FOMO, prompting even the most risk-averse investors make very risky choices. You can build an investment case to pour capital into Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD). Still, you will have a tougher time doing the same with Shiba Inu. But with every celebrity endorsement, the chants get louder for you to purchase this one.
Remember, there was a point in July where the coin was up over 700,000% in less than a year. When these spikes happen, the Shiba Inu community gets louder, and the pressure to invest increases.
Now it’s important to give credit where it’s due. The altcoin is an accepted payment method for NFTs on OpenSea. Meanwhile, Paraguay’s GRUPONICO has allowed Shiba Inu as a payment option for its 24-hour entertainment outlets. Most major crypto exchanges have listed the coin. And there have been rumors that the coin could be headed for Robinhood (NASDAQ:HOOD), the controversial but uber-popular trading platform which has completely upended the markets this year.
So, there are slivers of hope. But without upgrades or use cases, the bread and butter of any successful cryptocurrency, the altcoin is unlikely to be successful in the long run.
Earlier this month, Coinbase listed Shiba Inu on its platform. Due to the development, its market cap jumped to nearly $3.5 billion from $2.3 billion in less than 24 hours.
Since the listing is considered a benchmark in the crypto world, Shiba Inu bulls are rejoicing. However, there has to be something more concrete for investors to latch onto before this coin can be considered in the same league as Bitcoin or Ethereum.
Further adoption and accessibility might lead to a better outlook. However, with the recent Coinbase spike, now is not the right time to invest in this one.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio. Faizan does not directly own the securities mentioned above.