Shiba Inu (CCC:SHIB-USD) is down over 46% in the past month after peaking on Oct. 26. This is after SHIB crypto rose over 15% since Nov. 24 when it bottomed out during the month. I suspect that Shibu Inu may end up rebounding from here.
The market capitalization for SHIB crypto is down to $23.8 billion. That is slightly lower than Dogecoin (CCC:DOGE-USD), which has a market cap of $28.5 billion. Shibu Inu is the twelfth-largest cryptocurrency, just behind Dogecoin at tenth place.
However, investors in SHIB crypto have made a good deal of money in the past six months. For example, it was trading at $0.000009142, or $0.0009142 cents on May 31. But as of Nov. 29, it was at $0.00423 cents per SHIB crypto token.
The Power of Compounding
That means it is 4.627 times the price from 6 months ago or a gain of 563%. That represents an average monthly return of 29.1% each month on a compounded basis.
This shows the power of compounding, and it is especially powerful with cryptos. For example, it is not that big a deal for a crypto to rise 29% each month. The next thing you know over six months it is 4.6 times the original amount, based on the compounding effect. That is what happens when you compound 29% 6 times.
Many cryptocurrency investors are aware of this. To invest in a crypto as speculative as Shibu Inu is to live with volatility. You more or less have to embrace risk. The typical astute investor in something like Shibu crypto waits for the crypto to reach a trough and show signs of rebounding. Then the appropriate response is to average cost into the investment in order to lower the original cost basis.
This is where Shibu Inu is right now. It seems to be turning around, despite the recent scare from the Omicron Covid variant. That issue brought all cryptos down during the Thanksgiving weekend.
Recently the official Shibu Inu Twitter (NASDAQ:TWTR) site announced that the number of holders of Shibu crypto is now 1 million people. Coin Telegraph online magazine was impressed with this even though the crypto price is down 50% off of its all-time high.
In fact,as of Nov. 29, Etherscan indicated that there were 1.014772 million holders of Shibu Inu. Given that its market cap is $23.8 billion, this implies that the average person holds $23,450 in Shibu. However, that is probably not really the case since the actual median ownership is likely skewed much lower than this. It’s probably more like $1,500 or $1,000 on a median basis.
Where This Leaves Investors in SHIB Crypto
The past several weeks have led many to worry about their stakes in cryptocurrencies. A good number of them like Shibu crypto have taken huge hits. But it seems that this might actually be a good time to take advantage of this.
In fact, here is a contrarian indicator. Coin Telegraph wrote recently that Google Trends’ keyword search data showed a declining interest in “Shibu Inu.” The score has come in a 20 recently down from a perfect score of 100 not that long ago.
That coincides with the decline in the price of Shibu Inu crypto. In other words, less interest in the name Shibu Inu probably is the result of less interest in SHIB crypto.
Keep in mind as well that at the bottom, a stock or crypto will have much less attention or interest in it. It is therefore a good sign that there is now less interest in SHIB crypto. It could be a good time for existing investors to average cost down into the cryptocurrency.
On the date of publication, Mark R. Hake held a long position in Floki Inu but did not own any other security mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.