When I see the fallout in cryptocurrencies and Shiba Inu (CCC:SHIB-USD) particularly, I’m left with many mixed feelings.
On one hand, it’s difficult to watch an asset class which myriad analysts claimed offered substantial potential fall as hard as it did. Yes, cryptos are volatile and SHIB is extremely risky. Everyone knows that. But the context makes things very worrying.
As you’ve heard, the Federal Reserve, per the disclosure of its December meeting minutes, raised the red flag on soaring inflation. This circumstance potentially sets the stage for a hawkish monetary policy far more aggressive than what economists earlier anticipated. But then, cryptos were sold as a hedge against traditional monetary and fiscal dynamics.
That Shiba Inu and the rest of the crypto complex followed risk-on equities into the dumpster is disheartening. SHIB is decentralized but yet is centralized enough to fall in line with “analog” asset classes.
On the other hand, Shiba Inu is somewhat encouraging on the basis that people didn’t have to spend as much money to gain exposure to the exciting crypto space. Thanks to the law of small numbers combined with unprecedented public enthusiasm for virtual currencies, a relatively minor cash outlay could yield big results.
In contrast, the benchmark Bitcoin (CCC:BTC-USD) requires a large cash outlay for a relatively small potential payout. True, Bitcoin has become an established figure in the crypto market. But that establishment came at a cost of lower and lower returns as BTC became integrated into mainstream transactions.
If anything, if you were really wanted to swing for the fences, you’d go with Shiba Inu. It featured the right price point and unbelievable community support. Still, with the great crypto fallout, is there any reason to trust SHIB now?
The Deceptively Intriguing Fundamentals for Shiba Inu
Although most critics treat Shiba Inu like a speculative fad that’s sure to die out at some point (soon), technically speaking, the SHIB network offers utility. To be 100% clear, anybody thinking about venturing into this meme token should absolutely treat it as a super-high-risk lottery ticket.
Thus, if it works out for you, you’re pleasantly surprised. If it doesn’t, you already accrued the entertainment value out of your ticket.
But getting back to the fundamentals, yes, Shiba Inu does have them. In December of last year, the Flexa payment network added SHIB-USD “as a payment option at more than 40,000 merchants, according to a Be In Crypto report.” Per a pymnts.com article:
Flexa customers can spend their Shiba Inu digital currency by sending it through the SPEDN wallet on a smartphone app and use it to pay for purchases through the Flex Code that appears on screen, which allows the merchant to scan the code similar to Apple Pay and be paid in fiat through the Amp intermediary cryptocurrency. Flexa deducts the payment amount from the SPEDN wallet.
Major entities like Nordstrom (NYSE:JWN) and Lowe’s Companies (NYSE:LOW) accept Flex payments. Therefore, it’s not just merchants of dubious businesses that accept the platform that accepts Shiba Inu.
So, this is a huge victory for SHIB, right? It is in terms of publicity. However, in practical usage terms, the news item is akin to what I’ve been describing as magic blockchain words. In this case, the news seems positive for Shiba Inu but it might not move the needle at all.
I say that because merchants want predictability in their transactional currencies. Something that can change by a double-digit-percentage magnitude over a short period is a liability.
It’s Worse Now
Under this context, you can’t have your cake and eat it too. Meaning, when Shiba Inu was jumping higher, I can understand why some merchants might be willing to accept SHIB for their products. If you sold several packs of gum at X amount of SHIB and if the token price doubled or tripled within a week, you basically enjoyed a sales increase without incurring any overhead.
But should cryptos enter a bear market, it’s very possible for Shiba Inu to lose 20% or 30% or more within say a month’s time. That would represent a crippling tax on merchants, something that many retailers can’t afford due to the pandemic.
Either way, bull market or bear market, I’m not sure if merchants want to deal with SHIB’s fundamentals. Therefore, wager on it if you must but I wouldn’t bother considering its utilitarian value just yet. It’s still pure speculation.
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.