2 Reasons Shiba Inu Will Remain Stuck in This Pattern

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Shiba Inu (SHIB-USD) remains interesting simply because of the magnitude with which it grew in 2021. However, it still suffers from a lack of utility. That issue will continue to hinder its growth. Even so, fans are calling for it to grow to a $1 price. That remains wishful thinking. If it were to grow again as it has in the past, it would be mathematically possible. 

A concept token for the Shiba Inu (SHIB) crypto with lights sparkling in the background.
Source: Shutterstock

I don’t think that will happen because the project is simply an also-ran. It is attempting to solve the same issues other cryptocurrencies are dealing with by doing many of the same things. 

In other words, if Shiba Inu were to miraculously reach $1, it would do so by building crypto assets that other projects already have established strong positions in. That is a tall order. 

Race to $1

Let’s first address the idea that Shiba Inu has the ability to somehow multiply in value and miraculously reach $1. 

The likelihood of such an event transpiring is incredibly low. I can’t assign any numerical value to that likelihood, but I can tell you what kind of growth would be necessary for that to occur. For SHIB to reach $1, it would have to appreciate by roughly 4,166,000%. That means it would have to become 44,600 times more valuable than it currently is. 

I’d say that the likelihood for this to happen is zero, but Shiba Inu has already proven that it has that kind of explosive growth. Based on closing prices, Shiba Inu returned 30,212,289% between the first and last day of 2021. 

There is a big difference between now and then, though. That difference is what those levels of growth mean in terms of market capitalization.

At the time of this writing, Shiba Inu has a market capitalization of around $12 billion. If it were to grow to $1, that would mean its market capitalization would increase by a factor of roughly 45,000. $12 billion multiplied by 45,000 equals $540 trillion. There is around $40 trillion in physical money globally circulating. So, a $1 target is actually impossible. 

Of course, that doesn’t mean Shiba Inu can’t appreciate in price. But practically speaking, the likelihood of Shiba Inu reaching $1 is zero. If someone suggests otherwise, just run the numbers for them. 

One way it can appreciate in price is simply by upgrading. And one suggested way for Shiba Inu to upgrade is through Shibarium. 

Shibarium

That leads to the logical question about what Shibarium is. According to an article on Planet Crypto, “The Shibarium L2 is perhaps the most-requested SHIB upgrade. This will be SHIB’s layer-2, allowing its users to avoid the expensive transaction fees they currently face when using the base Ethereum blockchain for transactions.”

What Shibarium seeks is to improve are the underlying limitations of Shiba Inu. Shiba Inu is built on top of the Ethereum (ETH-USD) blockchain. The Ethereum blockchain is noted for high gas fees and congestion. 

But that is easier said than done. Sure, it would help Shiba Inu tremendously if it weren’t plagued by Ethereum’s current limitations. But in reality, no one knows when or if Shibarium will launch. Like much of the cryptocurrency landscape, the answer relies on hearsay. Suggestions are based on the notion that Shiba Discord mod Queenie expected a release perhaps in the latter half of 2022.

Takeaway on Shiba Inu

The notion that Shiba Inu can reach $1 has been fully discredited using simple math. But that simple math requires a willingness to be rational. That isn’t what got SHIB to where it is today, in my opinion. 

The other takeaway relates to Shibarium and Shiba Inu untethering itself from Ethereum’s constraints. That, too, seems less realistic and like more of a simple hope at this point. For those two reasons, I’d steer clear of SHIB. 

On the date of publication, Alex Sirois 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.


Article printed from InvestorPlace Media, https://investorplace.com/2022/03/2-reasons-shiba-inu-will-remain-stuck-in-this-pattern/.

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