Should You Buy Shiba Inu While Its Price Is Below $0.01?

In true crypto fashion, Shiba Inu (SHIB -3.71%) has risen to become a household name. By capturing the attention of investors with its meteoric rise and enticing promises of huge returns, the meme token once again finds itself in the spotlight after rising 150% so far this year.

But before jumping on the bandwagon and buying the hype that Shiba Inu could one day reach $0.01, it’s essential to understand its origins, fundamentals, and its role in the crypto landscape (or lack thereof).

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Tracing Shiba Inu’s origins

Shiba Inu was introduced to the crypto world in August 2020 as an experiment in decentralized community building. Modeled after Dogecoin, which itself was created as a joke, it aimed to capitalize on the growing popularity of cryptocurrencies and ride the wave of the dog-themed frenzy.

With its mascot, the Shiba Inu dog, and a passionate community, the cryptocurrency quickly gained traction, attracting attention on social media platforms and drawing in a significant number of investors.

Shiba Inu’s rapid ascent to prominence can largely be attributed to its low price, which made it accessible to retail investors seeking the next moonshot opportunity. Social media influencers and online communities further fueled the hype, promoting it as the next big thing in crypto.

Those efforts worked — at least for a time. In a matter of weeks, the token went from being virtually worthless to eventually ranking in the top 100 most-valuable cryptocurrencies by May 2021. By October of the same year, it had become the 14th most-valuable cryptocurrency as the meme crypto frenzy reached its peak.

Glaring issues will hinder its growth

Shiba Inu’s rise was nothing short of remarkable, but when the crypto winter set in, it saw its value plummet. As nothing more than a meme token, it lacked many of the fundamentals and utility of other cryptocurrencies. At the bottom of the bear market, it had lost more than 90% of its value

In recognition of its shortcoming, Shiba Inu developers set out to add more functionality in an attempt to change the narrative that the crypto was all hype. Today, its holders can purchase non-fungible tokens, swap tokens, and perform many other decentralized-finance (DeFi) activities typically found on other blockchains.

Despite these efforts, Shiba Inu faces one glaring problem: a circulating supply of 589 trillion tokens. The meme token would have to defy the laws of supply and demand to ever achieve substantial price appreciation. Basic economic principles dictate that an asset’s value is inversely proportional to its supply, meaning that Shiba Inu’s abundance undermines its potential for significant gains.

As part of its rebranding, developers implemented a burn mechanism to try to reduce the gigantic supply, but those efforts have remained futile. For Shiba Inu to actually gain value, even if artificially through a burn mechanism, it would need to remove hundreds of billions of tokens from the supply to ever reach $0.001, let alone $0.01 (it recently traded at about $0.000027).

To add further context, if Shiba Inu were to hit the $0.01 milestone, that means the meme coin would be worth more than twice the $2.6 trillion value of the entire cryptocurrency market, a feat that would defy reason.

Stick with the blue chips

Shiba Inu has picked up momentum with the onset of a new crypto bull market, but it remains inherently speculative. Investors are better off buying a lottery ticket than adding this token to their portfolios.

For those interested in cryptocurrency, it’s crucial to focus on assets with proven track records and functionality, like Bitcoin and Ethereum. Collectively, these blue chip names make up the majority of value in the crypto market and have established themselves as leaders in the industry, with strong fundamentals, widespread adoption, and clear functionality.

Bitcoin, often referred to as digital gold, has cemented its position as a store of value and hedge against inflation, attracting institutional investors and garnering mainstream acceptance. Ethereum is the backbone of the DeFi ecosystem, powering a wide range of applications and smart contracts.

By investing in blue chips like Bitcoin and Ethereum, investors can benefit from the relative stability, liquidity, and long-term growth potential offered by the cryptocurrency asset class. Shiba Inu might offer short-term excitement and speculation, but it lacks the foundation and credibility to justify a long-term investment.