Shiba Inu (CCC:SHIB-USD) has been rocked over the past few months. But is that really any surprise?
Leading cryptocurrencies Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD) are also in a bear market. Growth stocks have been pummeled with the Nasdaq a little more than 4% away from entering a bear market, while the S&P 500 has been moving in and out of correction territory.
Just based on these factors alone — and not knowing where Shiba Inu is trading — I would feel highly confident speculating that SHIB is in a bear market too. In fact, the dog-themed token is down around 75% from its all-time high, made three months ago.
Bear Markets Are Tough
I know some traders like the price of Shiba Inu because, at a fraction of a penny, they can buy millions of coins and it feels pretty, darn cool. But the reality is that trading at this low of a price is a pain in the butt.
Beyond this minor annoyance, I think it also says something about the quality of the asset. Supply and demand is the direct determining factor for an asset’s price. Just because one stock’s price is $1,000 and another is $100, it doesn’t mean the former asset is more valuable than the latter.
In the case of SHIB, though, the motivation was all wrong, which was to make a quick buck. That’s always been my biggest problem with this coin.
It was made to compete with Dogecoin (CCC:DOGE-USD), which itself was created as a joke. It’s like we have a joke derivative asset. I’m sorry, but short of a lotto trade, it seems insulting to even suggest getting long this cryptocurrency.
That said, I’m willing to trade just about anything, provided it has an attractive technical setup. Unfortunately, SHIB doesn’t fit the bill.
It is below all of its major moving averages and has been making a series of lower highs. It recently broke below its 200-day moving average and is struggling to reclaim it. If it does, aggressive bulls can consider a long position against this month’s low.
Back over the 10-day and 200-day could put $0.000029 back in play. Above that and Shiba Inu can continue higher, potentially to the declining 50-day.
That said, with it in a clear downtrend, I have no interest in trading SHIB on the long side. A break of this month’s low could create more selling pressure.
The Bottom Line on Shiba Inu
The “joke derivative” thesis was sort of tongue in cheek, but it highlights how Shiba Inu is really lacking long-term secular catalysts.
While I do believe in the long-term viability of digital currencies, I think there is only a need for a handful of these coins. At least in the present.
For some — like Bitcoin and Ethereum — there are clear catalysts. They act as stores of value and are well-recognized. Institutional investors are buying them and companies are starting to add them to their balance sheets. They can be used in transactions or sent to other users as a form of payment. Smart contracts become a reality with them too.
What’s Shiba Inu’s catalyst again? Oh yeah, to compete with Dogecoin.
In a bull market where sentiment is boiling over and there’s money to go around for everything, assets like Shiba Inu can make investors a quick (and big) buck. But during a bear market, assets like this can also make investors go broke in a hurry.
Until the trend changes — and Shiba Inu starts putting in higher lows — this is not where I want to invest to find value.
On the date of publication, Bret Kenwell 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.