Shiba Inu is up 47.5 million% this year, despite losing more than half of its value recently.
The crypto year 2021
2021 was a year of many ups and downs, partly due to the pandemic and the subsequent economic recovery. However, investors may remember the year because of the parabolic growth of certain crypto currencies.
It started with Dogecoin, which rose 15.644% to a price of $0.74 per token. However, it then declined to USD 0.17, where it still stands today. Despite the recent losses, Dogecoin’s annual gain is still at 3,500%. Bitcoin made ‘only’ 67% gains in 2021.
Investors in crypto currencies were not ready with the meme coins after this. Shiba Inu emerged as a crowd favorite in October and made a meteoric rise that far surpassed even Dogecoin’s. If you bought and held Shiba Inu on January 1 this year, you would now be on a 47.5 million% profit. In other words, a $3 investment would have yielded $1.4 million.
Investors who later bought Shiba Inu are less fortunate. Shiba Inu is down 58% from its all-time high.
Too much speculation, too little adoption
A big part of the problem with Shiba Inu is that too few companies accept it as a currency. Only 388 merchants find the token good enough as a means of payment for goods and services. This lack of support is not surprising given the fluctuations in the price of Shiba Inu. It would be incredibly difficult for a company to calculate cash flow and profitability when the value of the token changes drastically from day to day.
For that reason, the average consumer has no reason to buy or hold Shiba Inu. Except on the basis that someone will be able to get more for their tokens later on. This phenomenon is also known as speculation. Global adoption is the key to sustained price increases.
A similar situation played out around Dogecoin. It had the same struggle with merchant adoption and as a result has never recovered from its 77% drop in price. Last week, however, Elon Musk announced that the company would start accepting Dogecoin as payment for certain items. The token rose nearly 20% on the news, highlighting that adoption can boost sentiment.
The problem of Shiba Inu
Bitcoin is the world’s largest crypto currency. There are 18.9 million Bitcoin tokens in circulation, so at the current price of $46,000, the total value of all Bitcoins is $870 billion.
Here Shiba Inu runs into a problem. There are currently 589 trillion tokens in circulation, so at a current price of $0.0003 they have a total value of $17 billion.
But what if Shiba Inu rose to $1? This would mean that the total value would be $589 trillion.
If every consumer put their money and assets into Shiba Inu, it would mean that the token would still only reach a price of $0.73 per token. The total value would then be $431 trillion.
To sum up the above, it is very unlikely that Shiba Inu will ever reach $1 per token.