Shiba Inu (CCC:SHIB-USD) has been quite the phenomenon to watch. As a neutral observer, I’ve neither owned nor bet against a single Shiba Inu token. From afar, it’s been fascinating just how far a meme token itself based around being a copycat of another facetious asset could go.
Surely a Dogecoin (CCC:DOGE-USD) clone couldn’t become one of the most valuable assets in the cryptocurrency space? There had to be some substance to an asset that would be worth tens of billions of dollars at its peak, right? No, that was not correct. Narrative could indeed drive anything in the magical world that was the financial markets in 2021. That’s rapidly changing, however, as all sorts of former Reddit/WallStreetBets favorites are now crashing. This leaves very little to support Shiba’s sinking price.
Crypto Should Achieve Something
Bitcoin (CCC:BTC-USD) was founded with a noble vision. Since there are only 21 million Bitcoins that can ever be created, Bitcoin is an inherently stable monetary asset. In a world where fiat money dominates, Bitcoin offers a fascinating alternative. Its ability to be easily transferred also set Bitcoin apart from bulkier traditional stores of value such as gold and silver.
More recently, rival crypto coins and projects have arise to challenge Bitcoin. While Bitcoin has served well as a store of value, its code is too inflexible to make it useful for many newer crypto applications. For things such as decentralized finance (DeFi) and non-fungible tokens (NFTs), other cryptos such as Ethereum (CCC:ETH-USD) and Cardano (CCC:ADA-USD) are leading the way.
By contrast, what are meme tokens accomplishing? They aren’t a store of value. No institution or pension fund is going to invest in Dogecoin or Shiba Inu like they might in Bitcoin or other more reputable cryptocurrencies.
And it’s highly unlikely that tokens like Shiba Inu are ever going to achieve much practical use either. Developers have poured their hearts and souls into projects like Ethereum and Cardano. That doesn’t guarantee them success. But they are long-lived communities that are fully committed to making those cryptos serve real-world purpose. Shiba Inu, by contrast, started as a prank only made possible because of Elon Musk’s love for tweeting about dogs.
Shiba Inu Bull Cases Are Increasingly Imaginative
With a crypto bear market upon us, traders have been naturally rotated to safer assets. While almost all cryptos have dropped sharply since November, ones like BTC and ETH are holding up way better than random smaller tokens.
As such, owners of meme tokens are desperately trying to create some kind — anything at all — of a fundamental case to provide support for the price.
To that end, witness the series of increasingly silly developments out of Shiba Inu. For one project backers point to some sort of Shiba Inu metaverse — the “Shiberse” — that is supposed to launch by year-end. Judging by the price action over at Meta Platforms (NASDAQ:FB), investors have already thrown the metaverse concept to the dogs. Shiba’s picture of a dog in a virtually-generated world is unlikely to provide much support to the currency’s sliding price.
Bulls have also tried to spin Microsoft’s (NASDAQ:MSFT) acquisition of Activision Blizzard (NASDAQ:ATVI) as proof of Shiba Inu’s hidden value. But, it’s hard to draw a line between Activision’s popular games and Shiba Inu. It’s not like Activision built Call of Duty using a dog token as in-game currency or anything.
In perhaps the most spirited thought experiment, our Josh Enomoto recently highlighted how meme tokens such as Shiba Inu could play a role in the Cold War-style buildup of tensions between Russia, Ukraine, and the United States.
Shiba Inu Verdict
It’s certainly not impossible that a rogue leader such as Vladimir Putin could use Shiba Inu or other second-tier cryptos to shelter or launder funds. And perhaps Shiba Inu can benefit from the metaverse or consolidation in the gaming industry, or what not. These sorts of events are unlikely, but not impossible.
However, it goes to show just how difficult it is to justify owning Shiba Inu. That’s doubly true during a crypto bear market. Point to a Cardano or Ethereum and you can say this project is launching on that day, this other project has this much trading volume, and so on. There is real economic activity going on, and thus there are quantifiable key metrics to track.
With Shiba Inu, there’s virtually nothing to support the token aside from the community’s unwavering support. That’s worth something, to be sure. But that figure is probably a lot less than Shiba’s current $12 billion market cap.
On the date of publication, Ian Bezek 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.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a sizable New York City-based hedge fund. You can reach him on Twitter at @irbezek.
