After seeing its early February rally morph into a selloff, Shiba Inu (SHIB-USD) is moving higher again. Much of this is due to what’s playing out in the crypto markets in response to the Russia-Ukraine conflict.
At the onset of Russia’s invasion of Ukraine, Shiba, like other cryptos, briefly went into meltdown mode. In the case of this pup coin, the news caused it, along with its forebear Dogecoin (DOGE-USD), to drop 20%.
But other countries’ responses to the crisis (economic sanctions) are compelling Russians to swap their rubles for Bitcoins (BTC-USD). This rising tide is lifting the prices of dog-themed meme coins alongside more established names like Ethereum (ETH-USD).
Aside from this, investors may be bullish about other developments. Namely, AMC Entertainment (NYSE:AMC) is enabling the use of SHIB and DOGE to make purchases at its movie theaters. More news about Shiba’s token burning plans may be helping it move higher as well.
So, with much going its way now, is now the time to buy Shiba Inu? Wait just a second. Temporary boosters at best, this token’s slide will carry on once these developments finish playing out.
Shiba Inu and Its Crossover With AMC
Crossovers are a popular gimmick for comic books and TV. It seems natural that the concept — where a character from one work of fiction enters another work of fiction — would spill over into the world of meme stocks.
That’s basically the situation here with AMC and its plans to accept Dogecoin and Shiba Inu via the BitPay app starting March 19. This news has not only helped to move DOGE and SHIB back to higher prices. It’s given AMC stock, still down from its meme stock highs, a bit of a boost as well.
The Reddit crowd might be buying in anticipation of this new use case for these pup coins. But it may be a stretch to say it’s a true catalyst, in the sense it results in Shiba making a sustained move to a higher price level. Sure, the fact that it now can be used for a real-life application is a positive. It’s just not something that is going to spur more demand for either crypto.
In short, the boost from this news could give a little more of a boost before fizzling out as this development is fully absorbed. What happens after that? Although this token’s developers are putting in greater effort to reduce supply, ginning up demand again remains a work-in-progress.
SHIB Needs a Token Inferno
While the AMC meme crossover gimmick might not last, admittedly Shiba Inu has plenty of other tricks up its sleeve. Its developers have pursued many opportunities to renew enthusiasm for this cryptocurrency, which remains down more than 70% from its all-time high set in late October.
One avenue for this has been its efforts to build its own metaverse world: Shiba Lands. Much like Decentraland (MANA-USD) and other virtual worlds, users will be able to buy and sell digital real estate (using SHIB, of course.) This played a big role in its early February spike, but appears now to be having less of an impact on its price performance.
Another avenue it’s been pursuing more actively is token burning. Essentially the cryptocurrency world’s version of a stock buyback, burning entails destroying or “burning” circulating coins or tokens. By doing so, the outstanding supply is reduced, which in theory should make the remainder more valuable. Shiba Inu bulls have pointed to this as something that could really drive its move back to past highs. However, there are two flaws with this bull case.
First, shrinking supply is just one part of the equation. Demand needs to grow as well — and not from gimmicks like the AMC “use case” or the metaverse. Instead, this can happen by giving its native token greater functionality.
Second, while it’s shrinking what sounds like a large number of tokens, there are around 589 trillion tokens outstanding. Although it destroyed trillions of SHIB in the past and is at work to build what it calls a “token burn portal,” it’ll likely need to do more than that. Not just a few burns, and not just a bonfire. Think more like a full-on token inferno.
Most Investors Are Better Off Avoiding Shiba Inu
After its recent boost, the AMC gambit may have little other positive impact on its token price. Unless the token burn becomes an inferno, or maybe even a wildfire, there’s little reason to buy this reason either.
If you’re looking for a crypto gamble, SHIB may still have appeal. But outside of that, most investors shouldn’t waste their time — or risk their portfolio — with Shiba Inu.
On the date of publication, Thomas Niel held long positions in Bitcoin and Ethereum. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
