The price action in Shiba Inu (CCC:SHIB-USD), like many altcoins, is largely based on community. This idea of a shared community is also the driving force behind social media. But my children will likely never be on Facebook (NASDAQ:FB) because in their minds if their father can be on it, it must not be that fun.
In the same vein, the SHIB army has been saying it is always looking for new recruits.
I believe them, but that was when the goal was to hold on to the altcoin for dear life. They called it “hodling.” Now it appears investors are taking a more practical approach that may cause the SHIB army to look for a new battle.
Before you dismiss my argument out of hand, let me explain my reasoning. On Dec. 5, Watcher.Guru put out a Tweet that pointed out SHIB was still (emphasis mine) up 2,600,000% in the last 365 days. However, they could have just stated that as of Dec.3, Shiba Inu investors were “hodl”ing onto a year-to-date gain of 54,273,873%.
That means a $2 investment made at midnight on Jan. 1, was worth more than a million dollars as of Dec. 3, 2021. To say that’s an impressive gain would be an extreme understatement.
However, on New Year’s Day, I would guess that if you had said the words Shiba Inu to a mainstream investor they would simply think of the breed of dog and not the altcoin inspired by that breed.
It’s safe to say they are aware of it now and the recent price movement may show that Shiba Inu is attracting a less rebellious fan base.
Shiba Inu Is Getting Sold
Just about a month ago, a SHIB whale who saw their $8,000 investment grow to over $5.4 billion moved $2.9 billion from his Shiba Inu wallet.
By itself, this transaction probably has little to do with the overall price trend of the SHIB coin. What it may illustrate, however, is that practicality may be entering the minds of SHIB investors.
Mark Hake wrote that one likely cause of the price movement is tax-related selling.
I believe that’s a plausible explanation and it may also confirm that many of the recruits to the SHIB army came in with an end goal in mind. That goal required cashing out at some point.
However, if Hake is right about investors selling off for tax purposes, then it simply shows that altcoins like Shiba Inu may be becoming governed by practical thinking. That’s more boring, but it also could be a path to mainstream adoption.
Mainstream Adoption Is a Two-Edged Sword
One of the many things that has made me hesitant to join the SHIB army (or any other crypto tribe for that matter) is that I don’t have a good idea of how cryptocurrency will stand up to a genuine bear market. We’re already seeing some evidence of Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD) showing some correlation to the broader market.
As I’ve always understood it, the opposite should be true. When equities drop, cryptos should soar. Then again, this market is hard to understand so I’m not sure there’s enough evidence to say correlation proves causation.
Josh Enomoto was kind of in line with my thinking on this when he wrote “the character of Bitcoin (and perhaps other well-known cryptos) has changed from early adoption to mainstream acceptance.”
Enomoto was theorizing that Bitcoin is starting to carry a higher nominal risk for a lower reward potential. His larger point was that, by extension, Shiba Inu may be a better choice for investors looking for a better risk-reward dynamic.
But just as we don’t know how crypto will behave in a bear market, we also don’t know how altcoins will fare if they become mainstream. In 2021, a catalyst for the altcoin market has been that it’s something new and therefore more attractive. What it may become is something more predictable.
SHIB Is Not Going Away
In the long term, mainstream adoption of Shiba Inu may not be bad. After all, Facebook hasn’t gone away and social media continues to find innovative outlets for those looking for the next new thing.
But if investors begin to see the altcoin market as a practical, and predictable, way to take some risks with their fun money, then the true believers may find the risk-reward to be less attractive.
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On the date of publication, Chris Markoch 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.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.