What has been behind the incredible run of SHIB-USD? You can try to say that progress with this for-now low-utility crypto’s development is why it has moved up so much in such a short span of time. But in actuality, it’s a speculative frenzy that has moved it higher.
Yes, “speculative frenzy” may seem like the main driver for cryptos overall. But beyond the renewed hype for the major names in this asset class, there’s at least some semblance of substance behind it. For example, Bitcoin’s (CCC:BTC-USD) status as a U.S. Dollar alternative is playing a role in its rebound.
The growing popularity of DeFi (decentralized finance) is playing a role in the Ethereum (CCC:ETH-USD) rebound. But for this Dogecoin (CCC:DOGE-USD) offshoot? It’s mostly the hope that this low-priced token, still trading for a fraction of cent, will make its way to the 1 penny mark. With a circulating supply of 394.8 trillion, the idea of it making it up to a penny may be far-fetched. Worse yet, with a lot pointing to its latest rally running out of gas, your best move today may be to avoid it.
Shiba Inu is Showing Signs of Topping Out
After its triple-digit percentage run in a matter of months, enthusiasm for SHIB-USD appears to be peaking. For the past few days, it’s been trading sideways. Some of this may be due to profit-taking. It may also be due to speculators spreading their dog-based crypto bets more widely.
With names like Floki Inu (CCC:FLOKI-USD) gaining popularity, Shiba Inu may be on the verge of losing the spotlight it grabbed from Dogecoin. So, should you count on its current “stuck in neutral” price movement to continue. Or worse, start to make its way back to lower prices?
Yes. Events that in hindsight clearly drove its epic increase in price, such as its debut on Coinbase (NASDAQ:COIN), have come and gone. Barring further game-changing developments in the near-term, it may be tough for the coin to sustain the high excitement surrounding it.
Again, especially if new Shiba-inspired coins are emerging, and traders looking to “get rich quick” look to more under-the-radar names that have yet to take off. Add into the mix risks that may harm crypto across-the-board, caution may be key.
Two Ways Shiba’s Salad Days Could Continue
On the flipside to the signs of fading popularity for this speculative crypto, there are still things that could play out in the month ahead, which could enable this low-priced coin to make another triple-digit percentage move higher.
First, further progress with its utility. Admittedly, it has seen some improvements to its value beyond being only a speculative asset. For example, the launch of the ShibaSwap DeFi platform this summer. It’s going to take a lot of time before Shiba Inu is anywhere close to being in “Ethereum killer” territory. But any sort of progress in this area will likely be enough to give it an outsized boost in price.
Second is something I discussed when I last wrote about SHIB-USD: coin burning. Reducing its circulating supply, by “burning,” or removing coins/tokens from circulation. Basically the crypto version of doing a stock buyback, by reducing circulating supply, you enhance the underlying value of each individual coin/token. With either of these possible catalysts, this memecoin may be able to hold onto its recent gains, and possibly make a bolt toward higher price levels.
How high? Unless it does some serious coin burning, it’s hard to see it trading for 1 cent or greater per token. Multiply its current circulating supply by a penny, and you get around a nearly $4 trillion market capitalization. That’s nearly 400 times its current market cap, and more than three times the current market cap of Bitcoin. A three-fold move, to market cap on par with Dogecoin, though, may be possible.
No Harm in Buying it, Just Admit it’s a Gamble
Weighing signs its popularity has peaked, against potential catalysts still in play? It may be tough to come up with a verdict for SHIB-USD. Even as I believe the best move, given its unpredictability, is to avoid it.
But if you have FOMO, or are green with envy over the many who took a chance, and saw big gains from owning it? If you want some peace of mind, there’s no harm in buying a small position. Just keep it in mind that the story hasn’t changed much here.
Still a gamble, even as it tries to become more than a speculative “memecoin,” Shiba Inu remains the ultimate “all bets are off” situation.
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.