Here we go again with the Shiba Inu (CCC:SHIB-USD) volatility.
Tesla (NASDAQ:TSLA) Chief Executive Officer Elon Musk is again tweeting and his remarks are sending the price of Shiba Ino soaring.
The nascent cryptocurrency rallied 70% in 24-hours after Musk issued a cryptic tweet about his puppy. The value of the digital token has skyrocketed 367% in seven days of trading based on rabid enthusiasm for Musk’s comments.
Today, SHIB is worth less than one cent at about $0.000027 at this writing, but its latest rally has been enough to vault it into the ranks of the top 20 cryptocurrencies worldwide.
Shiba Inu is now the 12th largest cryptocurrency by market value, according to CoinGecko.
The question is, can the rally sparked by Elon Musk’s tweets be sustained, or will Shiba Inu end up crashing like so many other cryptocurrencies have this year?
Shiba Inu Is a Dog of a Coin
SHIB, which uses a meme of the Shiba Inu breed of Japanese hunting dogs, is not the only cryptocurrency that is vaulting higher right now.
Bitcoin (CCC:BTC-USD) has risen more than 30% in the past seven trading days and surpassed a price of $55,000 after it was revealed that famed investor George Soros owns an undisclosed amount of the largest digital coin.
Shiba Inu is also not the only cryptocurrency that is based on a meme featuring a dog. Dogecoin (CCC:DOGE-USD) enjoyed a similarly strong rally this spring that was also sparked by a series of Elon Musk tweets.
However, after peaking at a price of $0.72 in early May, Dogecoin’s rally fizzled and the cryptocurrency has since pulled back 67% to its current price of around $0.25.
Coincidentally, DOGE moved 13% higher in recent trading sessions following Musk’s latest dog-inspired tweets.
Dogecoin’s latest upward momentum has been dwarfed by the increase in Shiba Inu, which appears to have replaced Dogecoin as the meme crypto du jour among retail investors who hang on every utterance from Elon Musk.
Shiba Inu is one of the newest cryptocurrencies. It was founded by an anonymous person going by the online name “Ryoshi” just last year (August 2020).
The digital coin’s official website refers to it as “a decentralized meme token.” However, there’s a bit more to SHIB than just an image of a Japanese hunting dog.
While Shiba Inu started out as a joke investment, similar to Dogecoin, it appears to now be evolving with rumors that its creators are working to modify it so that it can be used as part of a decentralized cryptocurrency exchange.
Beyond Elon Musk’s tweets featuring his own real-life Shiba Inu dog named “Floki,” SHIB’s current boost has also been sparked by news that an anonymous investor has been purchasing large quantities of Shiba Inu coins in recent weeks. This investor has reportedly purchased more than six trillion coins worth an estimated $44 million.
That Shiba Inu may evolve into a digital asset with underlying utility, and the large purchases of the coin, are helping to elevate it beyond its original meme status.
SHIB Remains Highly Speculative
While Shiba Inu may end up becoming more than a meme, it remains a highly speculative investment. This is, after all, a cryptocurrency that trades for less than a penny and bills itself as the “Dogecoin Killer.”
It remains an extremely volatile cryptocurrency whose price can rise and fall based on a single tweet featuring Elon Musk’s real-life puppy. Nobody buying SHIB is doing so based on underlying fundamentals. Not right now, anyway.
Should there come a point where Shiba Inu evolves to the point where it has some practical and useful purpose, then investors may want to consider taking a position in the digital coin. But right now, SHIB retains its meme status.
There are many other ways for investors to gain exposure to cryptocurrencies, including by investing in more valuable and established digital assets such as Bitcoin and Ethereum (CCC:ETH-USD).
Keep Shiba Inu in the doghouse for the time being.
Disclosure: On the date of publication, Joel Baglole 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.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.