Shiba Inu (CCC:SHIB-USD) has been one of the main talking points during 2021’s meme coin extravaganza.
Many are under the illusion that Shiba Inu will remain this highly speculative product that people will gamble their spare money on, and they couldn’t be more wrong. I believe that the initial driving forces behind the general meme coin surge have allowed a handy instrument in Shiba Inu to gain the exposure it deserves.
Based on economic and fundamental principles, the coin is set for a period of stabilization, and the inclusion of recent idiosyncrasies may ensure that this comes to fruition.
Key Economic and Fundamental Variables
This year’s various surges in crypto assets can be tied to a few essential yet overlooked economic and fundamental variables. First is disposable income, an abrupt rise in disposable income as a consequence of stimulus checks was the initial driving force behind the meme coin surge. Disposable income per capita has declined significantly during the second part of the year and only sits at a surplus of roughly 7.5% versus pre-pandemic levels, indicating that irrational investments may slow soon.
As a consequence of the rise in disposable income per capita, crypto as an asset class has sucked in a lot of the financial markets’ capital. A pattern has started developing where household crypto assets such as Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD) have performed well, and in turn, traders have spent their profits on meme coins such as Shiba Inu. This pattern may well persist and it seems as though Shiba Inu is the go-to coin for investors who’re looking to diversify away from Bitcoin and Ethereum.
I believe crypto was traders’ asset of choice during the pandemic as the U.S. dollar was in for a torrid time; This snowballed into an inflation panic, which I believe opened the floodgates. It seems as though inflation will stabilize to 2.30% in 2022, diluting the mass appeal of alternative asset classes such as gold and crypto as the dollar rises with higher interest rates.
Having said all of this, I believe that Shiba Inu isn’t set for any spectacular near-term rises again, but there is scope for slow and steady gains. If we
ERC-20 and Corporate Acceptance
A massive plus for Shiba Inu is that it’s an ERC-20 coin, meaning that it runs on the Ethereum smart contract network. This means that Shiba Inu is a flow-through vehicle that provides capital to underlying business ventures, and it’s not just another coin relying on legal approval for it to be a means of exchange.
Shiba Inu’s flow-through is currently used to incubate NFT art projects and develop the Defi exchange called ShibaSwap.
A drift away from the token’s functionality is the worthwhile mention of AMC Entertainment’s (NYSE:AMC) recent announcement that it will be accepting Shiba Inu as a means of payment by mid-2022. This is a significant event for Shiba Inu; penetrating the corporate market arguably places it out of the “Yolo” meme coin peer group and could well ensure its future as part of the central crypto ecosystem.
The Fall Of DOGE
Shiba Inu has surpassed Dogecoin (CCC:DOGE-USD) in the list of top 10 most popular cryptocurrencies by market cap. Many investors have opted to divest from Dogecoin and flood their money into Shiba Inu. Both of these coins are community-based, meaning that a mass investor herding effect amplified their prices.
However, I’d have to revert to the fact that Shiba Inu is more than a store of wealth with its pass-through attributes, whereas DOGE is essentially a binary speculative bet and could be challenging to place intrinsic value on moving forward, thus ruling out much of the objective, institutional money in the market.
On the date of publication, Steve Booyens held a long position in SHIB-USD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Steve Booyens co-founded Pearl Gray Equity and Research in 2020 and has been responsible for equity research and PR ever since. Before founding the firm, Steve spent time working in various finance roles in London and South Africa, and his articles are published on various reputable web pages such as Seeking Alpha, Benzinga, Gurufocus, and Yahoo Finance. Steve’s content for InvestorPlace includes stock recommendations, with occasional articles on crowdfunding, cryptocurrency, and ESG.