The creators of Shiba Inu (CCC:SHIB-USD) have been more focused on popularity rather than providing real-world utility for its owners. Similar is the case with other meme-based cryptos such as Dogecoin. This is a problem for the SHIB stock.
There already is an underlying pessimism across the crypto market at this time. The top digital assets such as Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD) have sold off after China intensified its crackdown on cryptocurrencies.
Investors are looking at this as a buy-the-dip opportunity, pouring millions into Bitcoin, Ethereum and other top Altcoins. However, SHIB stock isn’t among them. Not for long-term value anyway.
Since the meteoric rise of Dogecoin (CCC:DOGE-USD), crypto investors have been looking at various altcoins which potentially follow in its paw prints.
Shiba Inu is perhaps the most popular of those prospects, often referred to as the Dogecoin killer. However, it has so far proved to be nothing more than a gimmicky knockoff.
It offers value for the crypto day trader to rake in some profits, but others nothing for the serious long-term investor in the sector.
The Chinese Crackdown and SHIB Stock
China’s top regulators have intensified the country’s clampdown on cryptocurrencies with essentially a blanket ban on crypto mining and transactions. Subsequently, Bitcoin prices went south along with the rest of the sector.
The massive run-up in Bitcoin prices and other digital assets revived crypto trading in China in the past year. As a consequence, investors have been using cryptocurrencies to find ways around various regulations.
This, unfortunately, comes at a time when China plans to develop its digital currency. Chinese regulators tightened the screws on the sector earlier this year, though, and that has now escalated.
Ten of the main Chinese agencies will be working together to eliminate illegal cryptocurrency activity. The People’s Bank of China (PBOC) has banned cryptocurrency trading and will punish anyone involved.
Additionally, The National Development and Reform Council (NDRC) will be launching a countrywide crackdown on the sector. Therefore, the intent is clear that the going will be incredibly tough for those involved in the crypto sector in China.
The latest dip in the market was less pronounced than in May when the Chinese government first announced its crackdown. SHIB has shed more than 8.5% of its value since September 24. Since May, crypto has dropped more than 77% of its value.
Outlook for Shiba Inu
I read a fascinating article in Block Journal about Shiba Inu from David Hsiao, who also happens to be the crypto magazine CEO.
He pointed out how the pet-based token’s success is completely contingent on its association with Dogecoin. Neither coin offers any innovative features or use cases for its investors, and their prices are driven purely by hype.
Eventually, their hype will fade away, and there won’t be many reasons for investors to purchase the tokens. Though it’s tough to know when that would happen, and they could potentially see a healthy run-up before they falter.
In May, the value of SHIB took off after Binance added it to its crypto platform. Its value rose again recently when it began trading on Coinbase.
Elon Musk’s tweet of his new Shiba Inu puppy named Floki led to a 40% surge in the crypto’s price. With the volatility in the market, it’s tough to predict where Shiba Inu could end up in a few months.
Bottom Line on SHIB
Shiba Inu is a digital asset best for short-term traders who could benefit from the violent price movements in price. It doesn’t have a long-term case, as it offers virtually zero utility for its owners.
Its price is incredibly volatile, which could change with the drop of a tweet from a high-profile celebrity. It’s best to avoid it.
On the date of publication, Muslim 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
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.