As you know, Shiba Inu (CCC:SHIB-USD) is one of the 16,000-plus alternative cryptocurrencies.
Beyond that, it’s a meme coin, although to be clear, its most ardent supporters will respond that SHIB represents a community and a movement toward the decentralization of everything.
Despite the objections, there’s no denying that this digital asset is terrifyingly volatile for most conservative investors.
With Shiba Inu, you can become a millionaire or a pauper, all within a matter of weeks, if not days, perhaps even hours. It’s a dangerous way to make a living but arguably, its diehard supporters will have it no other way.
With so much emotional fanfare over Shiba Inu, it’s incredibly difficult to determine a reasonable valuation for SHIB. Sure, it’s a community and such brand power has its own value, but because it’s also decentralized, Shiba is an idea.
If people lose interest in the idea for a competing brand, this token could be in trouble.
However, the Shiba Inu community has proven its resilience with a stubbornness matching that of a cockroach; and believe me, that’s no ad hominem attack. Seemingly out of nowhere, SHIB is (at this writing) ranked number 13 in market capitalization.
For context, Yum China (NYSE:YUMC), following the pain in the regional equities market, has a nearly identical market cap at $20.65 billion. That’s an accomplishment no matter what.
The Smart Approach to Shiba Inu
According to Psychology Today, “Pattern recognition according to IQ test designers is a key determinant of a person’s potential to think logically, verbally, numerically, and spatially. Compared to all mental abilities, pattern recognition is said to have the highest correlation with the so-called general intelligence factor.”
Even scientist, TV personality and flat-earth debunker Neil deGrasse Tyson stated that “The best thing we have going for us is our intelligence, especially pattern recognition, sharpened over eons of evolution.”
Well, I see a clear pattern with the Shiba Inu price, which implies that recognition of such may also be the best way to approach community-driven cryptos.
This year, between early April to early May, Shiba Inu spiked up sharply, then corrected and entered a lull period. Between early May and early October, SHIB repeated the pattern, a sharp spike up, a subsequent correction and then another sideways consolidation.
Currently, we’re in the midst of another one of these patterns. Between early to late October, Shiba Inu skyrocketed, only to again encounter a correction, this time to around mid-December.
At the moment, it appears that SHIB is inside a consolidation zone. Should the pattern repeat like the other times, though, we could see yet higher prices for the wild token.
Of course, the problem with depending on this dynamic is that past results are no guarantee of future performance. The current price action could always break the “rules,” leaving investors bitterly disappointed.
However, if you’re dead set on buying Shiba Inu, I’m not sure how else you can justify your speculation. The blockchain network itself doesn’t have — at least to my knowledge — publicly available income statements nor does it have earnings projections.
As I stated earlier, SHIB is decentralized. Therefore, without a centralized managing authority, it’s difficult to adjudicate its fundamental value.
Trust the Community?
While this meme coin is a difficult animal to pin down, there’s one bit of hope that could provide confidence in the pattern-recognition-based methodology mentioned earlier. Simply put, humans are predictable. If they weren’t, agencies like the FBI wouldn’t bother developing and refining their criminal profiles.
Theoretically, then, it’s possible that the strong, stubborn community driving Shiba Inu valuations is all the analysis that you need.
If I look at the fluctuations of SHIB, I can clearly see that human behavior on average (there are always exceptions) is predictable. So if the community continues to support SHIB, then it’s very possible that it can break out of its current consolidation toward higher ground.
Of course, the operative word here is possible. All cryptos are risky and Shiba Inu takes the cake. But if this is your type of carbohydrate, then add pattern recognition to your arsenal of analytical tools.
InvestorPlace does not regularly publish commentary about cryptocurrencies that have a market capitalization less than $100 million or trade with volume less than $100,000 each day. That’s because these “penny cryptos” are frequently the playground for scam artists and market manipulators. When we do publish commentary on a low-volume crypto that may be affected by our commentary, we ask that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: How to Avoid Popular Cryptocurrency Scams
On the date of publication, Josh Enomoto 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.
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.