Few assets have demonstrated as much millionaire-making potential as Shiba Inu (SHIB -1.65%)a controversial cryptocurrency that soared 45,278,000% in 2021. But this unprecedented rally was based on hype rather than sustainable fundamentals, and the token gave back most of its gains by mid-2022 .
Today, Shiba Inu is on the rise again. Let’s discuss its pros and cons to decide whether it has become a good buy in the long run.
A more speculative way to bet on cryptos
Meme Coinswhich began in 2013 with the launch of Dogecoinare less serious cryptocurrencies based on internet jokes. Unlike traditional cryptocurrencies, they are not designed to be useful in the real world or to improve on the shortcomings of other networks. Shiba Inu was created in 2020 as an alternative to Dogecoinand it copies some of the old cryptocurrency brands, like the Shiba Inu hunting dog.
In the long run, meme coins tend to be bad investments because they are often controlled by anonymous developers with little accountability. Their generally small size also makes them vulnerable to exit scams (also known as “rug pulls”), in which majority shareholders give up their stakes to make a profit and abandon the project. That said, there could be a glimmer of hope for some of these controversial assets.
Can meme coins “graduate?” »
The truth is no cryptocurrency has significant real-world utility. According to Statista, only 0.2% of online transactions are made using digital assets.
And while programmable blockchains like Ethereum have vast ecosystems of decentralized applications (dApps), most have not left the speculative and experimental stage. At this point, Shiba Inu itself is a programmed token on the Ethereum network.
In general, cryptocurrencies (even coins or others) get their value based on what other people are willing to pay for them. And as meme coins like Shiba Inu gain more mainstream acceptance over time, they could eventually become viable alternatives to the big names.
Image source: Getty Images.
Is the Trump administration a catalyst for growth?
Shiba Inu prices have increased by around 92% over the past 12 months, and this could partly be linked to political optimism. On the campaign trail, President-elect Donald Trump took a conciliatory tone toward the cryptocurrency industry, suggesting he could create a Bitcoin strategic reserve and potentially ease regulations on digital assets.
If true, it would mark a significant shift from the Biden administration, which saw the Securities and Exchange Commission (SEC) files lawsuits against major industry players like Coinbase on the allegations securities law violations.
According to the Associated Press, Trump plans to fill the vacancy following the announced resignation of current SEC chief Gary Gensler with cryptocurrency advocate Paul Atkins, who is widely expected to adopt a gentler approach.
Less regulatory uncertainty could open the door to more stable institutional ownership in the industry, which could reduce volatility and support growth. That said, the first profits will likely go to more established coins like Bitcoin and Ethereum. And it could take years for Shiba Inu to shed its coin stigma.
Is Shiba Inu a buy?
Right now, most of the bullish catalysts for Shiba Inu this year relate to the cryptocurrency industry as a whole, not Shiba Inu specifically. The token does not have many fundamental advantages that make it stand out from thousands of other competing projects.
If Shiba Inu remains popular in the long term, it could eventually shed the stigma of coins and become more accepted as an investment vehicle despite its lack of real-world utility. But until then, investors may want to stick to the more established coins like Bitcoin and Ethereum, which will benefit the most from potential industry deregulation.
Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Bitcoin, Coinbase Global, and Ethereum. The Mad Motley has a disclosure policy.