Early Investors of Shiba Inu Reaped Massive Profits
When Shiba Inu was launched on Aug. 1, 2020, numerous investors dismissed it as a joking parody of Dogecoin, named after the popular “doge” meme featuring the Shiba Inu dog breed. Shiba Inu differed from Bitcoin as it couldn’t be directly mined. Its entire supply of 1 quadrillion coins had already been pre-mined on the Ethereum blockchain, making it unlikely for many businesses to accept it as a regular payment method.
However, investors who purchased just $100 worth of Shiba Inu at its initial price of $0.000000000056 would have witnessed an astonishing surge in value, with their investment briefly reaching $154 million during the peak of the crypto rally. Presently, the value has settled at approximately $15.7 million.
The rally of Shiba Inu stemmed from several factors, including individuals using stimulus checks for investments, the fear of missing out (FOMO) fueled by social media chatter, the introduction of ShibaSwap (a decentralized exchange enabling coin trading and interest earning), as well as its listing on Coinbase in 2021.
Factors Leading to Shiba Inu’s Recent Price Decline
Toward the end of 2023, bullish investors anticipated various catalysts to drive Shiba Inu’s price upwards. The expectation was for stabilizing interest rates to end the “crypto winter,” and an increasing number of businesses accepting Shiba Inu as a form of payment, inspired by AMC’s example.
In addition, Shiba Inu expanded its ecosystem with the introduction of Shibarium, a new blockchain protocol on Ethereum supporting decentralized app (dApp) development, and ShibaDEX, a cross-chain decentralized exchange (DEX) acting as the official crypto wallet for Shiba Inu tokens. The reduction of available supply and price stabilization efforts were made by the burning of its own tokens throughout the past year.
However, above all else, the bulls’ optimism hinged on the Securities and Exchange Commission’s (SEC) approval of the first Bitcoin spot price exchange-traded funds (ETFs) potentially igniting the cryptocurrency market.
Despite these expectations, two key events contributed to the recent drop in Shiba Inu’s price. Firstly, a resilient jobs report suggested the Federal Reserve wouldn’t rush to cut interest rates in 2024. Secondly, Bitcoin’s price experienced a decline following the approval of ETFs, dragging down the wider crypto market. This decline implies that excessive hype had already been factored into the market ahead of the ETF approvals, and short-term traders were eager to secure profits.
Furthermore, Shiba Inu’s attempts to differentiate itself within the ecosystem through the introduction of dApps and a DEX may not prove effective in setting it apart from other Ethereum-based tokens, such as Solana. Additionally, the likelihood of it gaining widespread acceptance for mainstream payments comparable to BTC or ETH remains minimal.
Shiba Inu is expected to remain out of favor unless interest rates decrease, Bitcoin’s price stabilizes, and the crypto winter concludes. While it might exhibit wild and unpredictable movements in the coming weeks, sustaining gains throughout the year appears doubtful without clear catalysts on the horizon. It may be an exhilarating speculative opportunity for funds that can be affordably lost, but it is not yet a viable long-term investment.