The Shiba Inu gained 46,000,000% last year. It would need another increase of almost 4,000,000% to reach $1 in five years.
Over very long periods, the stock market stays above all other investment channels. While it may not exceed bond, gold or housing returns every year, the stock market offers a much higher average annual return over the long term.
But in the short term, it’s a whole different story. Since the trough of the pandemic in March 2020, the cumulative value of all cryptocurrencies has jumped from $141 billion to nearly $1.9 trillion. This represents a gain of nearly 1,240%.
While the cryptocurrency “safeties” Bitcoin and Ethereum deservedly get much of the credit for this large nominal increase in market value, it is the Shiba Inu meme currency that has attracted many new investors in the cryptocurrency arena in the last 15 months.
Things couldn’t have gone better for Shiba Inu last year.
Last year, Shiba Inu achieved what might be the best annual yield in history. At the start of the year, a single SHIB token could be purchased for $0.000000000073. If you are wondering why there are so many zeros after the decimal, remember that the initial coin supply was set at 1 quadrillion. Between midnight January 1, 2021 and October 27, 2021, when the tokens reached an all-time intraday high of $0.00008841, SHIB won an incredible 121,000,000%! Even after a setback at the end of last year, Shiba Inu grew by around 46,000,000%, a few factors worked in its favor
For example, visibility increased dramatically in 2021. Many cryptocurrency exchanges agreed to list SHIB, which significantly improved its liquidity. Additionally, the decentralized exchange ShibaSwap launched in July, further increasing liquidity for investors to stake their coins to earn passive income. Since staking became popular late last year, the median holding time for SHIB on major cryptocurrency exchange Coinbase has increased from six days to 115 days, as of April 18, 2022.
Another reason Shiba Inu has been virtually unstoppable in 2021 is the dynamics of cryptocurrency trading. With publicly traded stocks, it is relatively easy for bears to short stocks or buy a derivative, such as a put option. In the realm of cryptocurrencies, it is much more difficult for bears to bet against these assets. For example, some cryptocurrency exchanges do not allow short selling. Also, with the exception of bitcoin, there are no derivatives or futures for skeptics to buy. This created a natural buying bias which enabled the social media-induced momentum to launch SHIB”to the moon“.
Could Shiba Inu hit $1 in five years?
However, Shiba Inu devotees don’t believe their beloved piece is done climbing. Although it is nowhere near a penny, calls for SHIB to hit $1 per token persist on social media.
Based on the price per Shiba Inu piece of $0.00002515 at the time of writing, reaching $1 would represent an increase of nearly 4,000,000%. Keep in mind that SHIB brought in more than 10 times that amount last year – so nothing is impossible.
But to hit $1 per token in five years (by 2026), Shiba Inu will need to flawlessly execute a series of upcoming projects, innovations, and enablers.
For example, the launch of the Tier 2 blockchain project, Shibarium, should happen earlier than expected and work perfectly once launched. Shiba Inu being an ERC-20 token built on the Ethereum blockchain, it is exposed to the same high transaction fees and slow processing times that sometimes plague the Ethereum network. Shibarium’s sole objective is to significantly reduce transaction fees, in order to make SHIB-based transactions more profitable and attractive.
The reason why it is so important for developers to launch Shibarium is that almost all future projects rely on low cost transactions. For example, the developers of Shiba Inu have never made a secret of their desire to launch games based on non-fungible tokens (NFTs) and sell digital plots of land, called “Shiba Lands“, in their own metaverse. However, NFT markets cannot take shape until the high fees associated with each transaction are reduced. Being an early and successful player in the NFT gaming space could help support a higher valuation.
However, the biggest catalyst needed would probably be big events of “corner burn“. Coin burning describes the process of sending tokens to dead blockchain addresses where they are no longer accessible. Just as publicly traded companies buy back their own common stock to increase the value of each remaining share, coin-burning attempts to do the same in the crypto space.
Adding zeros is the most likely outcome for Shiba Inu by 2026.
Although Shiba Inu is sitting on a lot more projects and catalysts than he was this time last year, expecting everything to go smoothly doesn’t match the way the innovation works in the cryptocurrency arena.
Basically, a valuation of $1 per token without a massive coin burn event makes no sense. Based on an estimate of 549 trillion SHIBs still in circulation, a price of $1 per piece would give Shiba Inu a value ($549 trillion) that is more than five times the world’s gross domestic product. As an example, Apple is the largest publicly traded company, with a market capitalization of $2.7 trillion.
Another thing to consider is that Apple generated more than $112 billion in operating cash flow last year and is on the cutting edge of innovation. Meanwhile, Shiba Inu is nothing more than a payment coin that depends on the Ethereum blockchain. Worse, it’s not even a particularly useful payout coin. According to the online business directory Cryptwerk, only 659 merchants worldwide are willing to accept SHIB as payment.
As stated, reaching 1 dollar would require burning a huge amount of coins. However, this seems next to impossible given investors’ desire to hold on to their coins, as well as the minimal use case for SHIBs mentioned above. Although some companies may burn a small percentage of coins with each transaction, the number of tokens sent to dead blockchain addresses is negligible compared to the estimated 549 trillion SHIBs still in circulation.
Another problem is that Shiba Inu fails to stand out in an increasingly crowded space. While the launch of NFT-based games may help, it’s worth pointing out that interest in NFTs has dropped significantly over the past two months.
Finally, history suggests that a massive price drop awaits Shiba Inu – and is already underway. Looking at the performance of other coins and protocol tokens on payment networks that have achieved significant short-term increases, virtually all of them (bitcoin being the exception) have fallen by 93% or more in the 26 months following their peaks. With SHIB having gained 121,000,000% in less than 10 months last year, current and potential investors should sound the alarm.