Shiba Inu started trading at just $0.000000000056 per token on its first day. But it eventually soared to its all-time high of $0.00008616 on Oct. 28, 2021, and trades at about $0.00000947 today. In other words, a $200 investment in Shiba Inu would have briefly blossomed to $307.7 million before shrinking back to about $34.2 million today. The same investment in Bitcoin (CRYPTO: BTC) would only have grown to about $740 during the same period.
Why did Shiba Inu skyrocket?
At first, many crypto investors dismissed Shiba Inu as a one-off joke. It couldn’t be directly mined like Bitcoin since its entire supply of 1 quadrillion coins had already been pre-mined on the Ethereum (CRYPTO: ETH) blockchain at the project’s inception, and it seemed like a quick way to cash in on the speculative buying frenzy in hot altcoins.
That’s why Shiba Inu didn’t attract too much mainstream attention through the end of 2020. But in 2021 its price skyrocketed as the bulls stampeded toward speculative investments like meme stocks and cryptocurrencies. That rally was broadly fueled by social media buzz, which drove many retail investors to buy cryptocurrencies for the first time; stimulus checks; and a so-called fear of missing out (FOMO), which pulled in even more investors.
But that’s not all. Shiba Inu’s price was also lifted by the launch of ShibaSwap, a decentralized exchange which allows investors to trade their coins for other cryptocurrencies and earn interest from their staked coins; its listing on Coinbase (NASDAQ: COIN), one of the world’s largest cryptocurrency exchanges; and its growing acceptance as a payment method among merchants like theater chain AMC (NYSE: AMC). Elon Musk’s periodic tweets about Shiba Inu further amplified those gains.
Shiba Inu’s creators also gave half of all its coins to Ethereum co-founder Vitalik Buterin upon its launch. Buterin subsequently praised Shiba Inu and highlighted it as an example of new tokens that could be created on the Ethereum blockchain. All of that mainstream attention catapulted Shiba Inu from obscurity and turned it into a well-known cryptocurrency.
Why did Shiba Inu pull back?
Shiba Inu silenced a lot of its critics during its historic rally in 2021. But as its price skyrocketed, many investors cashed out. Buterin also donated 50 trillion of his coins (worth over $1 billion at the time) to India’s COVID-Crypto Relief Fund in May 2021, then removed another 410 trillion tokens from circulation by “burning” them because he didn’t want to personally own so many tokens from a project which he didn’t personally oversee.
Throughout 2022, inflation, rising interest rates, geopolitical conflicts, and other macro headwinds drove investors away from cryptocurrencies and other speculative investments. Shiba Inu’s price plummeted as the new crypto winter began.
Nevertheless, Shiba Inu’s anonymous developers continued to expand its ecosystem with ShibaDEX, a cross-chain decentralized exchange (DEX) which acted as an official crypto wallet for its own coins. It also announced plans to build a Shiba-themed metaverse to sell virtual land, non-fungible tokens (NFTs), and other digital assets. To gradually reduce its supply, it took 2.41 billion coins out of circulation with its first official coin burn in April 2022.
Can Shiba Inu revisit its all-time highs?
During the past 12 months, Shiba Inu’s price has risen about 20% as the crypto market has gradually stabilized. But it remains nearly 90% below its all-time high, and it seems doubtful it can revisit those levels without any major catalysts.
The biggest near-term catalyst for Shiba Inu is its recent launch of Shibarium, a new blockchain protocol built on the Ethereum network that supports the development of decentralized apps (dApps). It wants to draw more developers into that ecosystem with the Shiba Hub, a platform which streamlines the creation of dApps on Shibarium.
However, we’ve already seen many similar projects before, and there’s still no clear indicator that dApps will disrupt centralized app stores anytime soon. Investors should also note that trillions of Shiba Inu tokens are still held by a handful of mysterious so-called whales who can cause some big price fluctuations with their massive trades.
Shiba Inu has come a long way in just over three years, but I’m not convinced it has the staying power of Bitcoin or Ethereum. It will likely remain a popular coin for short-term traders, but it needs to prove that the expansion of its ecosystem with new features can actually drive its long-term adoption before its price can ever soar to new all-time highs.
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