The resurgence of cryptocurrencies left most investors surprised in the pandemic-ridden 2020. However, few had expected the exponential gains offered by meme-inspired cryptos such as Shiba Inu (CCC:SHIB-USD). After more than a year in the game, though, SHIB-USD continues to be a lottery ticket of an investment.
Shiba Inu is a cryptocurrency that is named after a special dog breed. The Ethereum (CCC:ETH-USD)-based token was founded in August 2020, following in the footsteps of the top meme-token in Dogecoin (CCC:DOGE-USD). Shiba Inu has shot up more than 5,000,000% since debuting in August last year, making it one of the hottest altcoins in the market.
Most crypto investors have focused on cryptocurrencies with strong fundamentals and use-cases such as Bitcoin (CCC:BTC-USD) and Ethereum. These digital assets have an established presence in the market and have gained acceptance from institutional investors, the top financial institutions, and major trading platforms. However, it’s tough to achieve a colossal ROI by investing in the industry stalwarts, which is why SHIB-USD has been a darling to short-term investors. Nevertheless, it remains an incredibly volatile investment, with little or no use-cases to support its rallies.
Shiba Inu’s Rapid Ascent
Shiba Inu has quickly risen up the ranks of the top cryptocurrencies in terms of market capitalization. The meme coin has been riding on the back of the success of another meme token in Dogecoin. Shiba Inu has been a massive beneficiary of the market’s proclivity towards pet-themed coins, along with tweets from “The Doge Father” Elon Musk.
Another element that has helped push SHIB-USD is access. Several crypto exchanges now offer crypto, including Coinbase Pro. Its astronomical rise a few months ago was that it was added on multiple crypto exchanges in many ways. Moreover, it has positively impacted its liquidity and developed an active community.
Furthermore, the launch of ShibaSwap in July this year has created a lot of buzz for crypto. The exchange allows Shiba Inu holders to stake their coins and earn interest. Though it’s not a new concept, it is likely to encourage investors to hold on to the coin for long periods.
The Problems With SHIB-USD
There are multiple reasons why Shiba Inu hasn’t attracted the attention of serious crypto investors. For starters, the top 100 of the crypto’s holders own 80% of its supply, which means that only a handful of ‘whales’ could push its prices down. These dumps usually occur after every meme cycle.
Moreover, lack of interest is another major problem for the pet-themed token. There have been dry spells for as long as five months, where its price didn’t move much. Without Elon Musk’s tweet, it probably would’ve been struggling to date. Additionally, as the precedence is set with Dogecoin and Shiba Inu, you’d expect several copycat meme coins to enter the fray soon.
Funny enough, Dogecoin appears to be a more accepted digital token compared with Shiba Inu. Only a few obscure companies accept it as a form of payment at this time. Hence, it’s fair to say that it has no use case outside of a crypto exchange.
Furthermore, the average holding time for Shiba Inu is just 14 days. However, if we consider the volatility in the market, it isn’t a big surprise that traders are always looking for short-term profits. Nevertheless, a six-day holding period shows that there’s nothing sustainable behind its rallies.
Bottomline On SHIB-USD
Shiba Inu has skyrocketed in value since its debut last year but hasn’t gotten mainstream investor attention so far. It offers little real-world utility to its owners, which is why serious investors have stayed away from it. However, it’s great for those looking for short-term gains and can handle a significant amount of losses. Hence, if you’re looking to dabble with crypto, it’s best to allocate a tiny part of your portfolio to marginalize the potential losses.
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