In retrospect, 2021 was an unprecedented year in financial markets. Investors were riding high as trillions of dollars in pandemic-related stimulus from the U.S. government combined with historically low interest rates to drive a surge in the prices of real estate, stocks, and even cryptocurrencies.

Shiba Inu (CRYPTO: SHIB) was the standout performer that year across all asset classes. It delivered a gain of 45,278,000%, which could have turned a well-timed investment of just $3 into more than $1 million. However, the meme-token then suffered a peak-to-trough collapse of 92% as the crypto industry descended into crisis, headlined by the failure of leading crypto exchange FTX in 2022.

But investor confidence is returning to the crypto market, and Shiba Inu is staging a recovery. It’s up 120% in 2024 already, which is even better than the 50% gain in crypto leader Bitcoin. So, can Shiba Inu make a similar historic run and soar to $0.10 from its recent price of $0.000025?

Shiba Inu continues to struggle with adoption

The key to any currency maintaining its value (and creating more) is adoption. Most cryptocurrencies have struggled with this, including Bitcoin. The largest crypto by market cap is still only accepted as payment by 9,442 merchants worldwide. Shiba Inu fares much worse, with just 933 merchants willing to take it.

Speculation can only carry a token so far — a fact that investors were reminded of during Shiba Inu’s post-2021 collapse. Eventually, you run out of new buyers willing to pay higher prices than you did to keep the upward momentum going. The Shiba Inu community has tried to introduce initiatives to encourage adoption, but those haven’t really moved the needle so far.

For example, in 2022, developers created Shiba Eternity, a digital card game designed to draw people into the Shiba Inu ecosystem. A virtual world (metaverse) in which Shiba Inu tokens will have some utility has also been in the works for a couple of years, but enthusiasm for virtual reality as a whole appears to be fading. Even Apple has experienced a sharp drop in demand for its Vision Pro virtual reality device.

Developers continue to improve Shiba Inu’s utility as a means for transacting. The token was built on the legacy Ethereum network, which is slow and has high transaction costs. That was a potential impediment to its broader adoption. Last year, developers launched Shibarium, a Layer-2 blockchain solution designed to process transactions off-chain, which reduces costs and the congestion on the network.

So far, no mainstream companies have announced plans to accept Shiba Inu on the back of Shibarium, so it appears the upgrade hasn’t really done much. It’s possible that businesses (and consumers) would simply prefer to avoid using a token that can soar rapidly in value only to turn around and quickly lose most of that value again. Such volatility would make cash-flow management nearly impossible for any business.

Image source: Getty Images.

Could Shiba Inu reach $0.1, even without widespread adoption?

Speculators were responsible for Shiba Inu’s meteoric rise in 2021 — could they send it soaring again? The setup is a little different this time because the token has a much higher value than it did a few years ago. Based on a recent price of $0.000025 and its total supply of 589.27 trillion tokens, Shiba Inu had a market capitalization of $14.5 billion.

Simple math dictates that a price of $0.10 per token, multiplied by its supply, would give Shiba Inu a market cap of $58.9 trillion. That would be twice as valuable as the entire U.S. economy, which generated $27.9 trillion in gross domestic product last year. It would also make the token around 19 times more valuable than Microsoft, which — with a market cap of $3.1 trillion — is the world’s largest company.

In other words, investors shouldn’t bank on Shiba Inu soaring by more than 434,000% from here to reach $0.10. It’s practically impossible. That said, the community is trying to reduce the Shiba Inu supply by “burning” tokens, which removes them from circulation forever. So far, though, the burn rate is so minuscule that it would take decades to make a dent in the enormous supply.

For all of the reasons mentioned above, I wouldn’t be a buyer of Shiba Inu at any price. There is no way to predict when sentiment about it might turn negative again and erase even the 120% gain the token has delivered so far in 2024.

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Bitcoin, Ethereum, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.