I’ve mentioned before that reading a bunch of zeroes after the decimal is akin to reading the Cyrillic alphabet. I can do it. I just don’t want to. If you’re going to throw a foreign language at me, I prefer my letters Latin. Unfortunately, I don’t have the equivalent courtesy with Shiba Inu (CCC:SHIB-USD), a virtual currency that gives me headaches.
I’m always left wondering, was that four zeros to the right of the decimal point or five? And yes, I can copy and paste but I’m a manual transmission type of guy.
I like to rifle through various comparisons with my calculator and Shiba Inu is not calculator friendly, but that’s the least of your worries if you’re a SHIB believer.
Over the trailing 24-hours as I write this in the wee hours of Dec. 4, Shiba Inu has tanked 18%. Ouch. It has recoverd a bit moving from that bottom of .000033 to about .000037 today.
Now, compared to Bitcoin (CCC:BTC-USD), that selloff wasn’t that terrible. As you know, alternative cryptocurrencies tend to be far more volatile than BTC. Yet the original crypto coin has dropped 17.4% during the same frame.
Further, there’s an argument to be made about extreme speculators. If you feel the fundamentals didn’t change for Shiba Inu (and other cryptos), then this selloff might be a once-in-a-blue-moon opportunity. Apparently, the government of El Salvador thinks this way, announcing the purchase of 150 BTC for around $48,700.
Adding to this narrative, the omicron variant of the novel coronavirus appears to be the main catalyst for the red ink, but that’s arguably a temporary headwind.
Still, the above might be little consolation to those who put a hefty amount of money into SHIB against all common sense. But when approached reasonably, SHIB just proved its worth.
Shiba Inu Is a Looser Slot Machine
One of the lessons that the crypto selloff provided for us — whether we wanted it or not — is that this sector is extremely treacherous.
When people talk about the intrinsic fundamentals of virtual currencies, I’m beginning to agree less and less. Ultimately, decentralized protocol as a concept is not copyrightable so it’s difficult to force residual income.
In other words, anybody can create their own blockchain project. The core advantage to Shiba Inu is its community, but this too is a whimsical upside catalyst in the long run. You must acknowledge this risk before proceeding with any crypto.
Naturally, astute traders come to the realization that established digital assets like Bitcoin offer relative stability over things like Shiba Inu. Therefore, many tend to focus on the majors. But this might not be the most accurate assessment.
Looking at Bitcoin’s price history from 2010 through Dec. 4, 2021, the difference between the total number of positive day-over-day sessions versus negative daily sessions is 17% in favor of the bulls. That sounds like the BTC market has an upward bias, which it does on this basis.
However, when you perform the same exercise above but from 2014 through the time of writing, you get a conspicuously different answer. The bulls are still favored but this time by only 12%. Don’t get me wrong — that’s still a strong ratio. But the magnitude of this ratio has declined by around 29%.
Adding to the challenge for Bitcoin investors is that they must now put up an even larger sum to acquire a whole unit than ever before. Yet in exchange for that higher nominal risk, you’re losing probability of success in Bitcoin’s new paradigm.
More risk, less reward potential? No thanks. It’s probably better to take a smaller risk with Shiba Inu.
Do What’s Right for You
Now, the counterargument is that Bitcoin, as a mainstream established virtual currency, is much more of a going concern than Shiba Inu. I’m not going to argue that point. Ultimately, I view SHIB as mostly an exercise in community-driven speculation.
Take away the community and you take away its power.
Still, before you buy the dips during this crypto selloff, I’d encourage you to run the numbers yourself. If you do, you’ll find that the character of Bitcoin (and perhaps other well-known cryptos) has changed from early adoption to mainstream acceptance.
But going back to my initial argument, this character change comes at a cost of a higher nominal risk for a lower reward potential. I don’t think I’m stretching too much to say that most investors won’t like this setup. Thus, if you’re going to gamble, you might as well consider a smaller wager with Shiba Inu.
It doesn’t mean it’s not risky because clearly, it is. However, you may lose less money if you adopt a responsible, calculated approach.
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On the date of publication, Josh Enomoto held a LONG position in BTC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.