Elon Musk’s tweet about what appears to be a rabbit holding up an emoji of something that could look like rockets has sparked another digital token rally. The Shiba Inu (CCC:SHIB-USD) meme-based cryptocurrency, SHIB, jumped 14% and roughly $3.8 billion minutes after the post, highlighting once again the helter-skelter nature of the altcoin.
At this point, purchasing Shiba Inu might seem like buying a lottery ticket. You don’t know whether it leads to anything substantial, but you are hoping against hope that it does.
The thing is, a lottery ticket doesn’t have an eccentric billionaire like Musk backing it up. The rallies we see in price might not be sustainable, but the money is being made and no one cares about much else.
At the heart of all this momentum is demand pressure. People are buying this coin because celebrities and influencers are hyping it up. And it has returned a phenomenal 26,918,840% over the last year.
People who are millionaires because of buying this coin at the right time will now swear by them.
While crypto millionaires are a real thing, the use cases and utility set each coin apart. Although Shiba Inu has an excellent development team, they have not set the coin apart in terms of functionality. Ultimately, purchasing something with no inherent fundamental value is not a prudent financial decision.
Celebrity Culture and Shiba Inu
Crypto-mania is sweeping the world. It’s a phenomenon that has taken over social media, and there are even people who only know about crypto from what they see on their favorite newsfeeds.
I don’t think we’ll be able to stop this soon; with everyone using these same platforms, it will continue spreading like wildfire until everything becomes either cryptocurrency-related or else filled up by some celebrity gossip article instead (unless you hop off right now).
This phenomenon has a massive effect on the investing world as well. The Chinese are on a quest to buy all the SHIB coins, even though they have no practical use. Traders in China know about the intrinsic value of the token, and yet still invest their money into them because of the hyped-up nature of the coin.
Recently, the Chinese social media site Weibo is lighting up with conversations about Shiba Inu. In a way, it mirrors what is happening with Reddit stocks back here in America.
A Chinese billionaire and venture capitalist named Charles Xue Biqun mentioned it several times to his more than 11 million followers that are keeping up interest in cryptocurrency projects like these.
Skilled Personnel, but No Substantial Upgrade
The developers of this project have decades’ worth of experience in the tech industry, and they are committed to making sure their coin has a practical use.
Since their project is still relatively new and there’s so much they could add with time, they want to harness the potential of Shiba Inu and help it become a serious cryptocurrency in its own right.
The bulls will tell you this is a great opportunity to get your feet wet and learn about all of the different aspects that go into investing in a nascent coin.
The economic hardship faced in today’s society is enough to push anyone into financial ventures such as investing in meme coins, especially when they have lost their jobs and cannot make ends meet, but experienced investors will only dip their toes if a cryptocurrency has utility and functionality.
No Solid Foundation
Anything that generates positive economic value is an asset. By its very definition, you should make sense of what benefit you will derive from purchasing an item.
There is very little incentive to invest in meme coins apart from the hype associated with the space. Plus, since meme coins are very cheap, the time is right to invest in them now rather than later.
This coin came into the limelight because it apes Dogecoin (CCC:DOGE-USD).
It has since grown through this hype despite not providing anything valuable and is still going strong with its popularity today. You can ride on its wave in hope of making some quick money before it dies down, but as the adage goes, “Hope is not a strategy.”
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Read More: How to Avoid Popular Cryptocurrency Scams
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.