The Price Game: Scarcity and Circulating Supply
Shiba Inu’s enduringly low price can be attributed to one primary factor: its vast circulating supply of 589 trillion coins. To put this into perspective, meme-coin rival Dogecoin (DOGE -0.18%) has a circulating supply of 142 billion, while Ethereum (ETH -0.29%) has 120 million in circulation.
It’s a general rule of thumb in the crypto market that the scarcer a coin, the higher its price. So, with simple mathematics, it becomes clear why a price target of $1 is currently unattainable. Multiplying $1 by 589 trillion coins gives an implied valuation of $589 trillion, an astronomical figure when only a handful of U.S. companies have market valuations of $1 trillion or above.
Shiba Inu aims to address this issue through a strategy called coin burning. By sending coins to a dead crypto wallet, they can remove them from circulation permanently. Coin burning could potentially make a significant dent in the circulating coin supply. However, the challenge lies in the numbers. Burning 1 billion coins per day would still take 1,000 days to burn 1 trillion coins. Bringing the coin supply under 1 trillion would require centuries at this rate.
The Crowded Meme Coin Market
Complicating matters further is the overcrowded meme coin market. Shiba Inu was initially a rarity when it launched in August 2020, with Dogecoin as its only mainstream meme coin competitor. However, the landscape has changed dramatically since then. The meme-coin breeding program seems to have unleashed a frenzy of lovable Shiba Inu dogs in the market.
For instance, there’s Floki, targeting fans of Elon Musk’s pet Shiba Inu named Floki. This overcrowding makes it challenging for Shiba Inu to regain its traction with meme coin investors. Interestingly, Shiba Inu hasn’t been the hottest meme coin of 2023 either. Bonk has taken that spot, with a staggering 10,000% surge in value this year.
In light of these challenges, leading blockchain developers for Shiba Inu have acknowledged the need to shift focus from memes to constructing a viable blockchain capable of gaining global adoption.
Considering the above factors, it’s difficult to envision Shiba Inu reaching the $1 mark in the near future, or even the $0.01 mark, for that matter. Furthermore, Shiba Inu can no longer claim the title of the most popular meme coin in the crypto market after being outperformed by “bonk” this year.
While a prolonged Bitcoin rally could potentially bolster Shiba Inu’s price in 2024, there are far better low-cost, high-upside investment options to consider for long-term prospects.