Musk Tweets Combine With Mathematical Potential To Send Shiba Inu Higher

Both investors and potential investors in Shiba Inu (CCC:SHIB-USD) should expect more of the same from the coin. The unpredictable volatility that has followed the other dog-themed cryptocurrency isn’t going anywhere.

A smiling Shiba Inu dog in front of a bright yellow background.
Source: Shutterstock

According to Coinbase (NASDAQ:COIN) SHIB prices had risen by 260% in the last week at the time this post was written. But they also declined by 20% over the previous day, and 8% in the hour prior to this writing on Oct. 9.

If that isn’t volatile, then nothing is.

What Underpins SHIB Movement

The short answer to the question of what drives SHIB movement is that no one really knows. But what is certain is that investors are going to continue to speculate on the wild ride that is Shiba Inu.

That’s a near certainty given the simple mathematics. SHIB currently trades at $0.000025, a fraction of a fraction of a penny. Frankly, that’s a number we don’t often see in everyday life, so it’s difficult to understand.

But if you were to invest $100 into Shiba Inu at that price you would then control 4 million units of the cryptocurrency. And that’s incredibly tempting given that it has appreciated by a mind boggling 23,000,000% over the last year.

Given those figures, it’s plain to see why the most speculative investors are drawn to it. It essentially defies logic much like Dogecoin (CCC:DOGE-USD) did earlier in the year. In fact, speculators are wondering whether seemingly unrelated news has caused a recent spike.

Origin of Recent Spike

Shiba Inu spiked 260% between Oct. 2 and Oct. 7. In crypto, that isn’t unheard of. In the stock market that is much more rare. And it has everyone talking.

Speculators are wondering what catalyzed the movement. There was a lot of speculation that a picture posted as a tweet from Elon Musk began the spike. The picture tweet included Musk’s puppy, a Shiba Inu named Floki, and little else.

But that tweet was sent on the evening of Oct. 3, well after the spike had begun a day earlier. So, at best, Musk’s dog, Floki, had something to do with the price spike but didn’t catalyze it initially. (Yes, you read that correctly.)

The much more relevant catalyst is the concerted effort to reduce the supply of Shiba Inu and thus make it more valuable.

Before diving into that though, I’d like to note my opinion here. It’s very obvious that playing with Shiba Inu will require an iron stomach when substantial amounts of capital are concerned.

In my opinion, that makes it very dangerous. The stock market maxim that you should only invest what you’re willing to lose holds doubly true in the case of SHIB-USD.

That aside, let’s get back to what is likely the biggest catalyst for the recent price movement.

Burn to Earn

My colleague David Moadel highlighted a concerted effort by the token’s developers to reduce the circulating supply of Shiba Inu.

As he notes, to do so a “coin holder transfers a portion of his or her assets to a wallet which nobody can access. In effect, this destroys those coins and thereby reduces the cryptocurrency’s total supply.”

It looks like his prediction has proven to be correct as prices have risen as coin holders take their respective coins out of circulation. One of the most notable of whom is none other than Ethereum’s (CCC:ETH-USD) Vitalik Buterin.

Shiba Inu has a total token supply of 1 quadrillion. Buterin is a massive holder and he recently sent 410 trillion SHIB to a dead wallet location. That effectively takes them out of circulation, cupping the value of the remaining tokens.

And, according to Coinbase, there are now 398.4 trillion SHIB tokens in circulation.

What to Do

Shiba Inu still makes sense based on the mathematics underpinning potential gains. You can even say that there’s a solid economic theory behind recent SHIB gains based on basic supply and demand tenets.

Investing in it remains a subjective matter. It will sound stupid to some, but to others it remains a great potential “I told you so” investment.

On the date of publication, Alex Sirois 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 Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

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