Volatility has always been a characteristic of cryptocurrency markets. The collective value of all existing coins and tokens recently reached an all-time high of nearly $3.9 trillion, but the market is once again in correction territory, down 12% as of this writing . Investors may remember when the sector suffered a 71% loss in value roughly a year after its previous major peak in 2021.
However, some individual cryptocurrencies are currently performing even worse than the market as a whole. Token meme Shiba Inu (CRYPTO: SHIB) was sitting on a 251% year-to-date gain, but it has since fallen 41% from its 52-week high.
Where to invest $1,000 right now? Our team of analysts just revealed what they think is the 10 best stocks buy now. See the 10 values ​​»
Shiba Inu had an incredible run in 2021 when it generated a return that could have taken a simple $3 investment to over a million dollars. This episode ended with a collapse in value of more than 90%. So is the recent decline the start of something worse or a buying opportunity ahead of another historic rally?
Image source: Getty Images.
Shiba Inu is still down from its 2021 peak
Shiba Inu reached an all-time high of $0.000086 in 2021 and ended this year with a total gain of 45,278,000%, which remains one of the best annual returns in the history of financial markets.
As I mentioned earlier, the Shiba Inu lost most of its value after this period, so its strong gain in 2024 was an encouraging sign that a recovery could be on the cards. However, even at its recent 52-week high of $0.000036, it has not even recovered half of its 2021 peak value.
It turns out that the latest rise was driven by a new dose of speculative fever. Shiba Inu has no use: it is only accepted as payment for goods and services by 1,025 companies worldwide (according to Cryptwerk), and many of them are obscure Internet companies, providers crypto services and online gaming houses.
Developers have tried to create new use cases for Shiba Inu and even launched Shibarium, which makes the token cheaper and more efficient to use in transactions. However, its price fluctuates primarily at the whims of speculators, who buy it in the hope that someone will be willing to pay a higher price in the future.
The crypto industry is on the rise, but Shiba Inu faces its own challenges
Trump’s electoral victory November 5 was the spark that ignited the latest rally in crypto markets, including that of speculative tokens like Shiba Inu. He will lead the most pro-crypto administration in U.S. history, and investors believe a lighter regulatory environment will pave the way for new value creation opportunities.
Outgoing Securities and Exchange Commission SEC Chairman Gary Gensler was a critic of crypto, and Trump recently nominated crypto advocate Paul Atkins to replace him (pending Senate approval). This will trigger a massive shift in how America’s top financial markets watchdog approaches the crypto industry.
This will likely benefit cryptocurrencies like Bitcoin (CRYPTO:BTC) And RippleIt is XRP (CRYPTO:XRP) most because they have real use cases. Investors view Bitcoin as a store of value and can even purchase SEC-approved products. exchange traded funds (ETF). XRP, on the other hand, plays a role in standardizing transactions within Ripple’s innovative payment network for banks.
Not only does the Shiba Inu lack these features, but it also has a supply problem. There are over 589.2 trillion tokens in circulation, which is why each token is trading at such a low price of $0.000036.
589.2 trillion tokens multiplied by $0.000036 per token equals one market capitalization of 12.5 billion dollars. So, for Shiba Inu to trade at a more normal price of $1 per token, a simple calculation suggests its market cap would need to be at least $589.2. trillion. According to UBSthat’s more than the total wealth of every person on Earth (as of the end of 2022).
Don’t bet on another historic race for Shiba Inu
Shiba Inu’s huge supply doesn’t necessarily mean it can’t generate gains for investors, but scarcity is one of the main reasons why cryptocurrencies like Bitcoin have become so valuable. Additionally, although the Shiba Inu community is trying to reduce the supply of “burning“tokens are could take thousands of years before enough of them are eliminated to justify a price of $1 per token.
Personally, I think the lack of a real use case for the Shiba Inu poses a bigger barrier to future price increases. There are real reasons to own cryptocurrencies as Bitcoin and XRPbut this is simply not the case for Shiba Inu.
It’s possible that Shiba Inu will recover from its latest decline and head toward its all-time high in 2021, but speculation is a shaky foundation on which to create value. As we learned previously, it can collapse without warning, which is why I don’t think investors should buy Shiba Inu at any price.
Don’t miss this second chance and a potentially lucrative opportunity
Have you ever felt like you missed the boat by buying the best performing stocks? Then you will want to hear this.
On rare occasions, our team of expert analysts issues a “Doubled” actions recommendation for businesses that they believe are on the verge of collapse. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
-
Nvidia: If you invested $1,000 when we doubled down in 2009, you would have $363,593!*
-
Apple: If you invested $1,000 when we doubled down in 2008, you would have $48,899!*
-
Netflix: If you invested $1,000 when we doubled down in 2004, you would have $502,684!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns December 23, 2024
Anthony DiPizio has no position in any of the stocks mentioned. The Motley Fool posts and recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.