Like many cryptocurrencies, Shiba Inu (SHIB-USD) is having a tough year. The altcoin is down 41% in 2022. And it’s down approximately 75% since peaking in October. On one level, this isn’t particularly surprising.
Cryptocurrencies in general are moving roughly in tandem with risk-on growth stocks. However, the decentralized nature of crypto was supposed to make it a safer alternative to equities that are tied to fiat currency.
This raises the question of why SHIB is losing value even as it is gaining utility? The answer may be found in a tweet that claims 80% of SHIB investors don’t care about the utility behind Shiba Inu. They only care about the price action.
This makes sense to me. I’ve become less skeptical of the crypto market. But it’s taken me a lot of time and research. And I still don’t consider myself anywhere near an expert.
The reality is that, to me, the utility behind many of these cryptocurrencies is not very interesting to me. It’s not that I’m not curious; it’s just that there’s only so many hours in a day.
But more revealing, when individuals talk about the utility of Shiba Inu or any other altcoin, I see very prepackaged comments that read like a nicely tossed word salad. I’m sure it means something to somebody. But it makes me wonder if they understand what they’re buying or just speaking a price hike into existence?
I’m not saying that the benefits behind Shiba Inu, or any other cryptocurrency for that matter, are unknowable. I’m saying that many casual investors have many other concerns. If they haven’t already abandoned the market, they’re looking for safe havens. And whatever Shiba Inu may be in the future it’s not that right now.
Nevertheless, if you do appreciate the utility behind Shiba Inu, the coin has many catalysts including the launch of its Shibarium, the coin’s role in the metaverse, as well as the fact that it is gaining more mainstream acceptance. For example, investors can now trade the coin on Robinhood (NASDAQ:HOOD).
However, in volatile times like this, people will invest in what they understand. During the pandemic, the SHIB army didn’t need to understand the inner workings of SHIB. All they needed to know is that when they bought SHIB it went higher.
But today, it’s going lower. The army doesn’t need a morale boost, they need a reason to believe that can be put on a billboard. That’s not going to be easy.
On the date of publication, Chris Markoch 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.