Now at a price that makes it the ninth most valuable crypto, is the Shiba Inu (CCC:SHIB-USD) super-rally wrapping up? Or does this “pupcoin,” now more valuable than Dogecoin (CCC:DOGE-USD), which inspired it, have a shot of making another big leap higher?
Putting it simply, it’s tough to tell. On one hand, logic would tell you that the mania over this token is unsustainable. Once the madness ends, traders will rush to cash out — causing the bubble to burst, and the price of SHIB-USD to collapse.
On the other hand, calling a top with a meme-based bubble is a fool’s errand. Similar to how AMC Entertainment (NYSE:AMC) and GameStop (NYSE:GME) have managed to sustain stock prices well above their respective underlying values, the same thing could play out here in the crypto world with Shiba Inu.
So that means it’s a buy, right? In a way, yes. The situation here at today’s prices is the same as it was when this token (which still trades for a fraction of a penny) traded for substantially lower prices. That is, if you’re having a fear of missing out (FOMO) about it, buy a little for peace of mind.
If it goes up even more, at least you’ve profited (somewhat) from the mania. If it crashes? You’ll lose money, but an amount you can afford to lose. In a situation like this, that’s the best way to play it.
Shiba Inu and its Supplanting of Dogecoin
As InvestorPlace’s Brenden Rearick recently reported, Shiba Inu now has a market capitalization higher than that of Dogecoin, the original dog-based cryptocurrency. But after this latest feat, it’s tough to handicap whether it has room to zoom higher.
Why? For starters, at a nearly $40 billion valuation, it’s the most valuable crypto with little in the way of utility to speak of. Lacking features like smart contract capabilities, it’s hard to imagine this coin becoming more valuable than Cardano (CCC:ADA-USD) or Solana (CCC:SOL-USD). Both have become very valuable due to the belief that once DeFi (decentralized finance) gains critical mass, they’ll become widely used in transactions.
Along with a lack of DeFi capabilities, it is lacking in another area. I’m talking about institutional investment. The “smart money” has embraced both Bitcoin and Ethereum. But that hasn’t happened with Dogecoin, much less this Dogecoin-inspired token. Not even Elon Musk, despite his dabbling in the dog-based crypto sphere, has entered a position in SHIB-USD. Nevertheless, although it lacks these catalysts, I wouldn’t say it’s settled that it’s topping out at today’s prices.
Why The Madness Could Continue
You can argue why Shiba Inu is on the verge of crashing until the cows come home. Yet as long as retail investors continue to dive into it, it’s hard to see why it won’t continue to climb in price. Especially as the possible buyer pool could deepen, if it becomes available for trading on Robinhood (NASDAQ:HOOD).
Given how much SHIB-USD has skyrocketed since its debut on Coinbase (NASDAQ:COIN), it’s not far fetched to believe a Robinhood listing could have a similar effect. Beyond just wider access, there’s something else that could help sustain its popularity.
I may have said above that Shiba is severely lacking in utility. But the token’s developers have made some efforts in this department. For example, the launch of the ShibaSwap DeFi platform. While not enough yet for it to join Cardano and Solana in becoming a so-called “Ethereum killer,” more progress could push it further into that category.
In short, the jury’s still out on whether SHIB-USD has more runway, or has peaked in price. If you feel the urge to buy it, there’s probably nothing wrong with throwing a little into it at today’s prices. You won’t “get rich” from taking this approach. However, it may do wonders to keep the FOMO feelings at bay.
With SHIB-USD, It’s Important Not to Take it Too Seriously
If, like many investors, you missed the opportunity to buy this “pupcoin” at lower prices, don’t worry too much about it. As the saying goes, hindsight is 20/20. Few could imagine that a “jokecoin,” especially an unofficial spinoff of one, could become so valuable in such a short amount of time.
With its run-up in price unprecedented, and its next move tough to predict, the best approach with Shiba Inu remains the same. Only invest what you can afford to lose into it.
On the date of publication, Thomas Niel held long positions in Bitcoin and Ethereum. He did not have (either directly or indirectly) any positions in any other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.