THE Shiba Inu (SHIB -4.01%) The cryptocurrency opened at a price of $0.00000000008 per token in 2021 before rising 107,499,900% to a high of $0.000086 in October of the same year. If you had a crystal ball and planned your investment perfectly, this gain could have turned just $1 into over a million dollars.
Some cryptocurrencies have a real use case. Bitcoinfor example, is used by many investors as a store of value, much like a digital version of gold. But Shiba Inu has no real use, it’s a meme token that mostly swings up and down based on the whims of speculators.
As a result, it has fallen more than 90% from its peak in mid-2022. Even after a positive year in 2024, the current Shiba Inu price of $0.000023 is still more than 70% below its all-time high.
However, cryptocurrencies are enjoying a series of tailwinds that could help them create a significant amount of value in 2025. So could Shiba Inu stage another historic run and reach $1 per token this time? The answer might blow your mind.
Risk sentiment, falling interest rates and the pro-crypto US government
Investors were extremely optimistic about 2024. S&P500, Nasdaq CompositeAnd Dow Jones Industrial Average all reached record levels throughout the year. Furthermore, the total value of all cryptocurrencies in circulation reached an all-time high of $3.9 trillion.
Favorable macroeconomic conditions have been a big help. The American economy has remained strong, while at the same time the Federal Reserve declared victory over the inflation surge of a few years ago, and started to reduce interest rates in September. Lower rates reduce the returns on risk-free assets like cash, making growth assets like stocks — and even cryptocurrencies — more attractive to investors.
The sentiment became even more positive after the arrival of the former president Donald Trump won November’s U.S. presidential election because he campaigned on pro-business policies such as deregulation and corporate tax cuts. Additionally, he has promised to lead the most pro-crypto administration in American history – he has already appointed crypto advocate Paul Atkins to lead the Securities and Exchange Commission (SEC), pending Senate approval.
These factors have created a risk environment that has been a boon for speculative assets like Shiba Inu. Therefore, even though the meme token has no real use case, it still more than doubled last year as investors rushed in hoping to profit from another historic rally.
Shiba Inu faces fundamental challenges, including supply problem
According to Cryptwerk, only 998 companies worldwide are willing to accept Shiba Inu as payment for goods and services, and many of them are obscure internet and crypto service providers, and even gambling houses. online games. Shiba Inu just doesn’t work well as currency; apart from its extreme volatility, the inheritance Ethereum The network it is built on is bulky and expensive to use.
Shiba Inu developers have created a layer 2 blockchain solution called Shibarium to address some of these issues, but it does not appear to have increased consumer adoption. Simply put, another speculative frenzy might be the only way Shiba Inu can generate significant upside from here.
But reaching $1 will be almost impossible in the Shiba Inu’s current state because it has a supply problem. There are 589.5 trillion tokens in circulation, so based on the current price per token of $0.000023, Shiba Inu has a market capitalization of approximately 13 billion dollars.
Simple calculations indicate that a price per token of $1 would result in a market cap of $589.5 trillion. This would make the Shiba Inu 159 times more valuable than Applewhat is the largest company in the world (valued at $3.7 trillion). It would also be worth more than the total wealth of every person on Earth, which stood at $454 trillion at the end of 2022, according to UBS.
The Shiba Inu community is trying to solve the problem of supply of burning tokens, which permanently removes them from circulation. The easiest way to achieve this is to send tokens to a dead wallet where they can never be recovered. Theoretically, the price per Shiba Inu token should increase organically in proportion to the number of tokens burned.
Image source: Getty Images.
Shiba Inu Could Technically Hit $1
Investors would have to burn 99.99998% of the current supply in order to send Shiba Inu to $1, based on its current market cap. Therefore, almost all of the 589.5 trillion tokens in circulation need to be disposed of, leaving only 13 billion.
Only 2.4 billion tokens were burned in the last month, which translates to an annualized figure of 28.8 billion. This won’t be enough to send Shiba Inu to $1 in 2025.
Here’s the part that makes your head spin: At the current rate, it will take 20,460 years to burn enough Shiba Inu tokens to justify a $1 price.
But it’s even worse, because burning tokens doesn’t create any value. This only reduces supply, making it appear as if the value of each token is higher because it trades at a higher price. As a result, even if you lived long enough to see all the necessary tokens burned, you would not make any money.
You would simply have 99.99998% fewer tokens, with the rest worth $1 each. The Shiba Inu’s market cap would still be $13 billion, so after 20,460 years, your net financial situation won’t have changed at all.