Shiba Inu: Risks, Potential and Other Investment Considerations
Founded in 2020 by an anonymous individual or group called Ryoshi, Shiba Inu is a meme coin designed to compete with its rival Dogecoin.
It hearkens to Dogecoin’s dog-themed branding and Tesla CEO Elon Musk’s pet dog, a Shiba Inu.
Unlike Dogecoin, a stand-alone blockchain, Shiba Inu is a token built on the more extensive Ethereum network. This gives the developers the flexibility to create more uses.
The Shiba Inu metaverse
In 2022, the team announced plans to build a metaverse called SHIB: The Metaverse. It allows users to play games, trade, and socialize within a virtual world based on Shiba Inu.
The platform is already conducting early access sales of virtual real estate, called “land,” which will allow individual users to customize their experience.
However, the land is only purchasable with Ethereum’s native token, ETH, and another asset called Doge Killer. So investors should only expect this project to create significant demand for SHIB tokens once it becomes more sophisticated.
Shiba Inu’s rally and volatility
In late 2021, Shiba Inu capped a rally of over 60,000,000% in less than a year, perhaps one of the fastest asset price increases in recorded history. This track record of volatility makes it more attractive to speculative cryptocurrency traders who want to make money fast.
As a whole, the cryptocurrency market is incredibly sensitive to macroeconomic conditions and liquidity in the economy. And in 2023, digital assets are following stocks upward as investors become optimistic that falling inflation could encourage the Federal Reserve to ease its hawkish monetary policy and avoid triggering a recession.
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The long-term potential of Shiba Inu
With its current market cap of $7.7 billion, Shiba Inu would have to jump by almost 30% to hit a valuation of $10 billion. And in a year, this is easily achievable considering its extreme volatility and the possible easing of macroeconomic conditions as inflation falls.
That said (except for the metaverse project under development), Shiba Inu has no notable real-world use cases to support token demand over the long term.
Its technical capabilities are based on Ethereum because it is programmed on Ethereum. It is too volatile to be useful as a store of value or medium of exchange. And it doesn’t boast advantages in speed or transaction capacity.
Thus, we’re left with a token that’s clearly a high-risk, high-upside option best served in a bull market. For most conservative long-term investors, it’s also clear that there are many more reasons to be highly cautious with meme tokens. The fact that these cryptos don’t provide meaningful value right now means investors are buying into a story. That story may or may not become a reality.
Investment considerations for Shiba Inu
It’s been an excellent year for all cryptocurrencies thus far. Indeed, meme tokens such as Shiba Inu are starting to show signs of recovery. This can provide significant trading gains for aggressive momentum investors who catch the wave at the right time.
Investors should remember that Shiba’s rally is mainly speculative, not fundamental.
Andrey Kunev
Reporter at CoinsPress
Andrey Kunev is a knowledgeable cryptocurrency content creator passionate about the crypto market. With extensive experience in market analysis and investment reporting, Andrey is a valuable asset to the CoinsPress team. As a frequent contributor, he offers insightful and comprehensive coverage of market trends, price fluctuations, and new advancements in cryptocurrency. Whether you're a seasoned investor or just getting started, Andrey's clear and concise writing offers a comprehensive look at the current state of the crypto market and its prospects. Stay up-to-date with CoinsPress's expert analysis and commentary on all things cryptocurrency.
