There is a way for Shiba Inu to reach $1, but investors won’t necessarily make money.
It’s been a great year for cryptocurrencies, especially those on the smaller, more speculative end of the market. Industry leader Bitcoin is up over 130%, while the meme token Shiba Inu (SHIB 3.49%) soared more than 180%.
However, the Shiba Inu is still trading 65% below its all-time high, set in 2021. It generated a spectacular return of 45,278,000% that year, which would have been enough to turn a $3 investment into more than a million dollars. Unfortunately, the speculative frenzy that motivated the rally petered out as quickly as it began.
But now that the Shiba Inu has regained some momentum, could 2025 be the year it climbs $1 from its current price of $0.00003? The answer might leave your head spinning.
Investors are positive about cryptocurrencies, but fundamentals matter
THE cryptocurrency industry entered a bear market in 2022. The total value of all coins and tokens in circulation fell to $821 billion from a record high of $3 trillion. An avalanche of failures across the industry contributed to this downfall, headlined by the collapse of FTX crypto exchange.
Regulators successfully prosecuted several bad actors, which helped investors regain some of their lost confidence. And the Securities and Exchange Commission has approved dozens of Bitcoin Exchange Traded Funds (ETF) earlier this year, which now offer financial advisors and institutional investors a safer, more regulated way to invest in the industry-leading coin.
As a result, the total value of all cryptocurrencies in circulation recently reached a new record of $3.8 trillion. Bitcoin accounts for about $2 trillion of that value, and investors are interested in it as a true store of value akin to digital gold. However, despite big gains this year, many of the smaller tokens on the market (like Shiba Inu) still lack fundamentals.
Only 1,047 companies worldwide accept Shiba Inu as a means of payment for goods and services, and many of them are obscure online service providers or even gambling sites. If consumers can’t spend their tokens at their favorite stores, they have no reason to own them. Since Shiba Inu is also not a good store of value (given that it is still trading well below its all-time high), this leaves the token as little more than a vessel for speculators.
The crypto community has attempted to create new uses to bolster the coin’s value, but so far none have really shaken things up. The developers even launched Shibarium, which is a Layer-2 blockchain solution designed to remove some of the awkwardness and cost of legacy Ethereum network on which Shiba Inu is built. In theory, paying with Shiba Inu should now be much easier, but that hasn’t incentivized consumers or businesses.
Image source: Getty Images.
Shiba Inu has a supply problem
Perhaps the biggest obstacle to Shiba Inu reaching $1 is its huge supply. As of this writing, there are 589.3 trillion tokens in circulation. At the current symbolic price, Shiba Inu has a market capitalization of approximately $18 billion.
A simple calculation suggests that at a price of $1 per token, its market capitalization would be $589.3 trillion. That’s more than the total wealth of every person on Earth, which stood at $454 trillion at the end of 2022, according to UBS. In other words, there is absolutely no chance that Shiba Inu will reach $1 per token as things currently stand.
However, its community is trying to reduce the supply by burning tokens, which means permanently removing them from circulation. The easiest way for investors to participate is to send their tokens to a dead wallet, where they can never be recovered. In theory, the price of Shiba Inu should increase organically in proportion to the number of tokens burned.
Crypto Could Technically Hit $1
Based on Shiba Inu’s current market cap, investors will need to burn 99.99998% of its tokens in order to increase the price per token to $1. Thus, almost all of the 589.3 trillion tokens currently in circulation must disappear, leaving only 18 billion.
Only 3.7 billion tokens were burned in the last month. If this pace continues, approximately 44 billion will be burned in 2025, which will not be nearly enough to bring Shiba Inu to $1 per token next year.
Here’s the mind-blowing part: At the current rate, it will take 13,271 years to burn all the necessary Shiba Inu tokens!
And it’s even worse. Even if you lived to this day, you wouldn’t make any money. Burning tokens creates no value; this simply reduces the supply, making it seem as if the value of each token is higher because it trades at a higher price.
Therefore, in 13,271 years you would have 99.99998% fewer tokens, with the remainder worth $1 each. Shiba Inu’s market cap would still be $18 billion and your net position would be exactly the same as it is today.