Cryptocurrency Market Faces Correction: Shiba Inu’s Future in Question
Volatility remains a characteristic of the cryptocurrency landscape. Recently, the combined value of all cryptocurrencies reached a staggering $3.9 trillion, yet the market is now experiencing a correction, having dropped by 12%. Investors may recall the significant downturn when the industry lost 71% of its value about a year after peaking in 2021.
Shiba Inu Struggles After Strong Start
Meme-token Shiba Inu (CRYPTO: SHIB) began the year with an impressive gain of 251%. However, it has decreased by 41% from its 52-week high.
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In 2021, Shiba Inu made headlines as a $3 investment skyrocketed to over $1 million. However, this surge ended with a more than 90% decline in value. Now, the question looms: Is the current drop indicative of further losses, or a potential opportunity for another buy-in before a major upswing?
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Historical Context of Shiba Inu’s Market Performance
Shiba Inu hit an all-time high of $0.000086 in 2021 and finished that year with a staggering total gain of 45,278,000%. This remains one of the most remarkable annual returns in financial history. Nevertheless, after the initial surge, Shiba Inu lost most of its value. Its recent strong performance in 2024 offered hope for recovery; however, even at its peak of $0.000036, it still hasn’t regained half of its 2021 value.
The latest rise in Shiba Inu’s price stemmed from a surge of speculation. Currently, it lacks tangible utility, being accepted as payment by only 1,025 businesses globally, primarily obscure internet ventures and crypto-related services. Developers have sought to find new applications for Shiba Inu with the launch of Shibarium, intended to lower transaction costs and improve efficiency. However, price movements are largely influenced by speculative trading rather than real-world applications.
Crypto Industry Showcases Opportunities, But Shiba Inu Encounters Unique Hurdles
The pro-crypto climate created by Trump’s latest election victory has bolstered the crypto market, including tokens like Shiba Inu. His administration is anticipated to foster a more favorable regulatory environment that could open doors for growth.
Outgoing Securities and Exchange Commission (SEC) chairman Gary Gensler’s criticism of cryptocurrencies has been a roadblock. However, Trump’s appointment of crypto supporter Paul Atkins may signal a transformative shift in how the SEC engages with the crypto sector.
Such developments may favor cryptocurrencies with established use cases more than tokens like Shiba Inu. For instance, Bitcoin (CRYPTO: BTC) serves as a reliable store of value, while Ripple’s XRP (CRYPTO: XRP) facilitates efficient transactions in banking environments.
Shiba Inu’s challenges are magnified by its significant supply. With over 589.2 trillion tokens circulating, the current price is heavily diluted at just $0.000036. If Shiba Inu aimed for a more typical price of $1, its market capitalization would need to reach $589.2 trillion—an amount exceeding the total wealth of the world (as noted by UBS as of late 2022).
No Guarantee of Another Historic Rally for Shiba Inu
The abundance of Shiba Inu tokens doesn’t eliminate the possibility for gains, but scarcity has been a key factor in the value growth of assets like Bitcoin. While the Shiba Inu community is engaged in “burning” tokens to reduce supply, it could take thousands of years to sufficiently lower the count to support a $1 valuation per token.
Ultimately, Shiba Inu’s absence of genuine use cases poses a significant barrier to future price increases. There are compelling reasons to own cryptocurrencies such as Bitcoin and XRP, but for Shiba Inu, that rationale is absent.
While Shiba Inu could potentially recover from its downturn and move toward its past highs, reliance on speculative trading is inherently unstable. We’ve seen such investments collapse suddenly, leading to the conclusion that it is not advisable to put money into Shiba Inu at this time.
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Anthony Di Pizio has no positions in any stocks mentioned. The Motley Fool holds positions in and recommends Bitcoin and XRP. The Motley Fool’s disclosure policy applies.
The views expressed here are those of the author and do not necessarily represent those of Nasdaq, Inc.
