The most important points
- Since its debut 15 months ago, Shiba Inu has gained more than 14,000,000%!
- A variety of growth drivers, including Elon Musk’s tweets, have wrought SHIB’s historic rise.
- Both history and real-world benefits suggest that Shiba Inu is headed for a crash.
The stock market is one of the world’s greatest wealth creators, and has been for longer than any of us have been alive. Stocks may not be the most successful asset every year, but they have always outperformed bonds, real estate and other investments over the long haul. For that matter, the benchmark S&P 500 has averaged an annual total return of more than 11%, including dividends, since early 1980.
But in recent years, a number of branded cryptocurrencies have really swept Wall Street. Although Bitcoin’s gains since its debut more than a decade ago have been impressive, Shiba Inu’s (CRYPTO:SHIB) returns since its debut last year have been truly stunning.
Here’s how much $100 invested in Shiba Inu on day one is worth today
The meme coin Shiba Inu first traded on select cryptocurrency exchanges on August 1, 2020, with a first-day price of $0.00000000051 per token. At the time of writing, late in the evening of October 31, SHIB tokens were purchased for $0.00007163. It may be difficult to do the math with all those zeros, but that 15-month increase since debut equates to 14,044,998%. By comparison, the S&P 500 is up 41% over the same period.
Imagine if you had the wherewithal, courage and luck to invest $100 in SHIB on August 1, 2020 at the above price and held the position for the last 15 months. Your investment of $100 would now be worth (drum roll) $14,045,098. Yes, over 14 million US dollars! That would put you in the top 1% of the richest American households, whose entry level is around $11 million.
How exactly does a $100 investment turn into a $14 million fortune in 15 months? Let’s take a closer look.
This is the reason for Shiba Inu’s historic rise.
One factor that has benefited SHIB is increased awareness. Over the past 15 months, more and more cryptocurrency exchanges have allowed Shiba Inu to trade. There are even rumors that leading crypto exchange and ecosystem Coinbase Global will list SHIB in the not-too-distant future. That’s not so far-fetched considering that Shiba Inu is now the ninth largest digital currency by market capitalization.
The decentralized exchange ShibaSwap, launched in July, has also contributed to SHIB’s rise. ShibaSwap allows investors to bet their coins to earn interest. While this is nothing new in the cryptocurrency landscape, it is an important step in encouraging novice investors to hold their SHIB tokens for a longer period of time. More long-term Shiba Inu investors should lead to less violent price fluctuations.
As I mentioned earlier, there is also an inherent buying bias in cryptocurrencies. While investors can easily bet against some of the largest and most well-known digital currencies using derivatives, it is otherwise difficult to short sell or bet against more than 99% of the 13,000+ cryptocurrencies. There is no question that SHIB has benefited from naysayers not having access to short-selling channels.
And yes, Elon Musk gets credit, too. The CEO of Tesla recently adopted a Shiba Inu named Floki. Every time Musk posts about his dog or mentions the Shiba Inu breed in a positive light, investors snap up SHIB tokens.
SHIB could be one of the worst performing cryptocurrencies in 2022
Although these are life-changing gains and the cryptocurrency market has shown time and time again that it doesn’t play by the same rules as the traditional stock market, it would be foolish to think that this rise is sustainable.
Although price gains of 14,000,000% are not all that common in the crypto space, we have seen five- and six-figure price increases in a short period of time for a number of popular coins. The XRP token used by Ripple gained more than 62,000% in roughly 10 months through early 2018. In the two years that followed, XRP eventually lost 96% of its value.
Similarly, Litecoin surged to over $350 per token in December 2017 and lost 93% of its value a year later. Bitcoin has also seen several steep corrections of 80% or more over the past decade. The point is that large price gains conditioned by momentum and emotion have not proven sustainable in the crypto space.
And it’s not just history that is Shiba Inu’s enemy. There are tangible factors that should worry investors.
For example, the launch of ShibaSwap has increased the average holding period for SHIB, but not by much. Even with the option to bet the coins, the average holding period for SHIB is only 10 days, according to Coinbase. This clearly shows that most people are keen on the volatility of SHIB and are not particularly interested in the long-term history or use case.
Speaking of the use case, there is pretty much none. You’d think the ninth largest cryptocurrency would be accepted by many retailers, but only about 100 mostly obscure online merchants accept SHIB as payment. Outside of a cryptocurrency exchange, Shiba Inu has no use.
All of these factors suggest that Shiba Inu will have a bad year in 2022.