What drives the price of the digital asset? The answer to that should be the starting point for anyone starting down the path of cryptocurrencies investing, as one of my InvestorPlace colleagues mentioned in a Dec. 15 article about top seven things you should know about Floki Inu (CCC:FLOKI-USD).
“This question is tough to answer,” wrote contributor Stavros Georgiadis. “There are many FLOKI price predictions online, but their validity is highly questionable. This is another highly speculative, highly volatile crypto that has utility and wants to be more than your average meme coin.” Sorry to disappoint those looking for a look ahead to cryptocurrency price prediction 2022.
Further, it “may easily surge and crash at the same time. Before deciding to invest in Floki Inu, be fully aware of all the high risks related to crypto investing.” You’re not going to find me contradicting my colleague. FLOKI is extremely speculative, something that you trade with pennies that you pick up from the parking lot.
I don’t necessarily mean that in a literal sense. However, you should realize that Floki Inu — as does any crypto of its ilk — operates under the law of extremely small numbers. Therefore, the mechanics of FLOKI comes down to Physics 101.
My analogy is from behind the wheel. As you know, you feel greater acceleration when your car is moving from a low velocity to a high velocity, as opposed to transitioning from an already-high velocity (such as freeway speeds) to an even higher velocity. The basic reason this is so is because inertial mass increases from higher speed, which then requires greater energy input to move the underlying object.
That’s also the reason why objects can’t reach the speed of light. Theoretically, as any object approaches the speed of light, its inertial mass becomes infinite. All of which leads me to a few basic takeaways regarding FLOKI.
Floki Inu May be Good for a Pop or Two
Coinmarketcap.com ponders the question of whether or not Floki Inu will hit one penny. Because “of its extremely high supply, it’s unlikely that FLOKI will ever reach one cent.” Still, it leaves hope for the possibility.
As the crypto resource notes, Floki Inu has enjoyed a strong uptrend, especially since its market introduction. So, it’s not entirely out of the question for the token to graduate into non-fractional currency units (at least based on the smallest denomination of U.S. fiat currency).
But moving closer to the decimal point will require about a 300-fold move from FLOKI’s highest price ever printed. I’m not saying its impossible but such a market capitalization would rank Floki Inu as the third-most valuable crypto. I just don’t see it happening. Its heavily distributed supply is emblematic of the speed-of-lightning dilemma for really fast objects.
Arguably, though, FLOKI’s wide distribution is what imbues the token with its greatest asset: strong community support. If this were priced into the stratosphere with a limited supply, it’s hard to image that it would attract the ravenous support that it does.
At the same time, playing the law of small numbers is a tradeoff. Like in the automotive example above, you either have maximum acceleration and low velocity, or high velocity and minimal acceleration. You can’t have your cake and eat it too.
That’s why Floki Inu — unless something truly bizarre happens — is “condemned” to be a spiky, volatile trade. By opening admissions to everyone, FLOKI is the community college of cryptos. By default, it can’t have Harvard Medical School-level of exclusivity. Therefore, this asset could be good for a pop or two but it lacks the credibility of a blockchain project that can comfortably go the distance.
Be Aware of the Numbers Game
Let me be clear about the above statement. I’m not saying there’s zero chance of Floki Inu going the distance. But with the big dogs having established their territory, it will be increasingly difficult for competitors to steal away market share.
Also keep in mind that if cryptos incur a steep correction, most people will presumably prefer established coins and tokens — you know, the ones that are in the top 500 by market cap at least — before they start digging through the trash at the bottom of the $2.4 trillion global market.
So, it comes down to a numbers game. On balance, it’s not likely, thanks to the influx of competition, that you’ll get rich off Floki Inu. But as an entertaining alternative to the casino, it might be worth some of your loose change.
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.
