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Lack of Real-World Utility Will Hurt Shiba Inu in the Long Run

Shibas are family dogs in Japan that you can find everywhere. They’re small, black and white, with long tails, making them easy to mistake for one another. Shibas have been seen as an iconic symbol of luck. And now, these pups may become known worldwide thanks to the meme coin called Shiba Inu (CCC:SHIB-USD).

Concept red tokens for the Shiba Inu (SHIB) cryptocurrency.
Source: Shutterstock

The coin rose several hundred thousand percent since late January of last year when speculators piled into the coin due to celebrity hype.

Shiba Inu is different from the other more stable coins out there because of a lack of use cases. Plus, unlike Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD), institutional investors are not pouring capital into this one.

The only silver lining is that the coin is getting wider acceptance as a payment method. Alongside this factor and the celebrity hype surrounding the coin, SHIB is trading purely on momentum.

However, considering the coin is making multi-millionaires out of novice investors, even the most skeptical trader is suffering from anxiety about missing out. But before you invest your hard-earned cash, it is important to note that this coin is not for the faint of heart.

All cryptocurrencies come with a certain degree of risk. But with Shiba Inu, you get far more than you bargain for at most times. Therefore, if you want to invest your savings, you should probably check out Ethereum or Solana (CCC:SOL-USD).

Both of these altcoins have more use cases and utility than Shiba Inu. Hence, invest a tiny portion of your portfolio in this one and nothing more. After all, you do not need to invest a lot to make a fortune with this one.

Extreme Volatility Is a Hallmark with This Altcoin

One can use swings trading to take advantage of market trends. The idea behind this strategy is that you will be holding a tradable asset for one or more days to profit from price changes, also known as “swings.”

However, even the most volatile stocks have nothing on cryptocurrencies that have cleaned out savings accounts or made novice investors multi-millionaires. Just to put things into perspective, one investor, who had invested $8,000 in Shiba Inu in August last year, was at one point worth a whopping $5.7 billion.

So it’s important to make sure you time your exit and entries well. Take the example of the Shiba Inu whale, who discreetly transferred 40 trillion SHIB tokens worth $2.76 billion to four different wallet addresses recently.

Understandably, Shiba Inu prices went into a tailspin because of the potential that these coins could find their way to the market. However, it didn’t take long for markets to rebound. As investors clamored for the coin to register on Robinhood (NASDAQ:HOOD), the tokens rose to unprecedented heights.

Both of these events have very little to do with the coin itself. The Shiba Inu cryptocurrency has no special features that make it more useful or practical than any other crypto. Consequently, it should not surprise that legendary investor Michael Burry has referred to Shiba Inu as a pointless investment. He took a particular issue with its supply of one quadrillion coins, limiting price appreciation.

Musk Can Only Help So Much

Shiba Inu is one of many meme-themed coins out there that did phenomenally in the last few years. However, due to the support of Tesla (NASDAQ:TSLA) CEO Elon Musk has shot the coin into superstardom, leaving many meme coins behind. Understandably, the celebrity endorsement has done wonders for Shiba Inu.

To the surprise of many, Shiba Inu’s price jumped in October after Musk posted a photo on Twitter (NYSE:TWTR) that featured one of his dogs and an adorable pup with freckles. This gave investors hope for success — until it became clear he didn’t own any SHIB tokens. His portfolio includes Bitcoin, Ethereum, and Dogecoin (CCC:DOGE-USD).

Plus, it’s important to keep in mind that Musk’s opinions on crypto keep changing. Although he was one of the earliest cheerleaders for Bitcoin, he has done an about-face recently because of the impact on the climate.

Invest a Small Amount in Shiba Inu

Shiba Inu has made several multi-millionaires in the past year. Stories like that of Glauber Contessoto, who invested $250,000 in Dogecoin on Feb. 5 and became a millionaire on paper two months later, on April 15, are all over the news.

These kinds of stories will likely inspire several other novice investors to take their funds and invest them in the stock market. However, if you are borrowing money or looking to your savings to invest in crypto, think twice before betting on Dogecoin.

It is just that. You are betting. A more nuanced approach will look out for unique use cases when investing in cryptos. One of the best examples is Ethereum. Much like other cryptos, it is subject to massive volatility.

But it has upgrades coming up that will enhance its functionality. We do not have the same slate of upgrades to look forward to regarding meme coins, such as Dogecoin and Floki Inu (CCC:FLOKI-USD). It is the prime reason why Shiba Inu is failing to find support. It has broken below the key $0.00003535 level. The only chance for a turnaround is if bulls start to get in on the action before Christmas.

However, considering the current state of affairs, the chances of recovery are slim.

On the publication date, Faizan Farooque 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.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.

Article printed from InvestorPlace Media, https://investorplace.com/2022/01/lack-of-real-world-utility-will-hurt-shiba-inu-in-the-long-run/.

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