Beware The Rise Of Shiba Inu
BY Chris Andreou
|October 27, 2021The memecoin of the day comes with risks, and many traders may want to consider alternative investments.
In hindsight, DOGE’s irrepressible rocketship to the moon was one of the great all-time trades. An investment of $1,000 at the start of 2019 would be worth well over 110,000 today. Coulda woulda shoulda.
It’s easy then, in the midst of this crypto fog, to forget that for most of our lifetimes, the stock market has been the leading wealth-creating machine. Even taking into account its bad years, it has consistently trounced other investment vehicles such as gold, oil and property.
But over the last few years, there has been a swift and dramatic changing of the guards. Equities have been left trailing in the wake of several cryptocurrencies: Bitcoin, the world’s crypto titan, has returned 8 billion percent since 2010, while DOGE has returned more than 5 million percent since its launch in the fall of 2020.
But it’s not bitcoin or even DOGE, that’s currently generating the most buzz in the crypto world. That honour belongs to SHIB, the world’s second-largest memecoin that’s nipping at the heels of its dogged predecessor.
What is Shiba Inu (SHIB)?
To say there’s a lot of hype surrounding SHIB would be a serious understatement. Shiba Inu is a self-proclaimed meme coin that follows fast on the heels of one of the world’s greatest-returning digital tokens, DOGE.
At launch, its anonymous and somewhat mythical founder, Ryoshi, donated half of the entire SHIB supply (1 quadrillion tokens) to Vitálik Buterin, the co-founder of Ethereum.
Vitálik promptly gave 1 billion worth of those tokens to India’s Crypto Covid-19 Relief Fund, and then, astonishingly, “burned” the remaining 6.7 billion worth of tokens by sending them to a dead wallet.
SHIB’s current market cap is an estimated $35 billion. To put that into perspective, that’s roughly as much as the US technology giant HP and cereal giant Kellog’s.
The coin has been touted as a DOGE “killer”, as it seeks to supplant dogecoin as the world’s most popular pet-themed memecoin. And so far, you wouldn’t bet against it.
Why Shiba Inu is on fire.
The first hurdle for any coin to overcome is the issue of access. SHIB has been listed on several major exchanges for some time now, and this has helped support its skyrocketing prices.
Secondly, buyers of SHIB are encouraged by the development of the Shiba Inu ecosystem, which consists primarily of the decentralised exchange ShibaSwap. In addition to the exchange of tokens, ShibaSwap also lets users stake their SHIB into a pool to earn interest.
Although liquidity pools are nothing new in the crypto space (ahem), the opportunity to generate returns by locking in SHIB coins is designed to encourage owners to hang on to their tokens for longer periods.
Third, momentum is definitely on Shiba Inu’s side. It has so far returned around 5 million percent since its debut. When retail traders and small-time crypto players hear the words “five million percent”, and “less than fifteen months”, they are going to pile into SHIB with collective FOMO.
In addition to all of that, there have been recent, unconfirmed rumours that the US stock-trading app Robinhood is soon to list the coin. One website which referenced an unnamed source said that Robinhood would list the coin by last Monday. That day came and went without SHIB being listed, but that didn’t quell the rumour mill. Then, Robinhood itself sent out a survey asking its users which crypto they’d like to see listed on the app. Needless to say, that’s when SHIB really hit the fan, the coin surging by more than fifty percent in the following hours.
It’s not all sunshine and roses.
While digital assets such as DOGE and SHIB have been on a tear recently, they don’t come without significant risks.
Memecoins are a relatively new phenomenon, and nobody really knows what the future holds for these tokens. They could continue to be the next big thing, or they could, as some are speculating, prove to be a disastrous flop. So although you could make money piling into DOGE and SHIB, you could just as easily lose it all.
Here are a few of the top reasons to be wary of SHIB.
Low average holding period
For all the fanfare, there appears to be a clear lack of conviction among SHIB holders. This is borne out by the fact that the typical holding time for the coin is just 16 days. What this tells us is that most people are simply trying to ride the wave of a get-rich-quick scheme, without believing in the long-term viability of the project. It proves that retail investors are twitchy and willing to jump ship at the slightest move up or down.
Low number of users
According to Etherescan, there are roughly 790,000 holders of SHIB. Considering its $11 billion market cap, that’s a relatively small number that should have investors worried.
Compare that figure to the 75 million or so people around the world who hold Bitcoin, or the roughly 10 million who hold ETH. The point here is that for Shiba Inu to become mainstream, it would need a much wider user base, and it simply doesn’t have that right now.
A victim of its own success
As we’ve mentioned, SHIB has already risen by more than 5 million percent since its debut 15 months ago. This jaw-dropping number is what’s inspiring many thousands more to jump aboard, but unfortunately, it also means the SHIB has likely already sailed.
History tells us that gains of this magnitude simply never hold up. Even bitcoin, which recently flirted with new all-time highs, frequently experiences pullbacks of more than 50 or 60 percent.
History is definitely not on Shiba Inu’s side.
Alternative trades to Shiba Inu
We’re not saying that SHIB is definitely a dud, but for all the reasons listed above, you need to ensure you have a high-risk tolerance before you even consider making a serious investment in SHIB. And even if you do, it’s also always smart to balance that out with a diversified portfolio of more established assets.
Bitcoin & Ethereum
If you’re hell-bent on a crypto trade, it may be wise to consider established cryptos such as bitcoin or ethereum. They’ve been around for much longer than SHIB, and they have historical price references, which makes them more predictable and more compliant to technical analysis strategies.
Critically, they also have real-world utility. Bitcoin is increasingly being used as a digital substitute for gold, while Ethereum’s smart contracts make it the go-to blockchain of choice for almost all new crypto projects.
Pandemic Stocks
Several companies that have either benefited from the pandemic – or are seeking to benefit from the global recovery – are set to report earnings in November. Wise investors will be keeping an eye out for the performance of many of these companies.
Pfizer (November 2nd) – Analysts are expecting that Q3 earnings will reflect the enormous gains the pharmaceutical giant has made during the pandemic. The company is by far the largest manufacturer and distributor of covid vaccines, having produced and administered some 500 million vaccines worldwide. Its closest competitor is Moderna, which has so far sunk a paltry 150 million microchip vaccines into the arms of the hoi polloi. November could be a good month for Pfizer.
Travel Stocks (November 3rd) – Several travel stocks also report earnings in November, seeking to continue their post-covid bounce. With the world having slowly opened back up, travellers who had been keeping a holiday or three in their pocket finally ventured back out into the big world last summer.
If you’re interested in diversifying your millions of SHIB, keep an eye out for Lufthansa, Wynn and Marriott, which all report Q3 earnings on November 3rd.And don’t forget, you can trade bitcoin, ethereum, and other cryptos and assets with a regulated, reliable broker here. Go long or short on thousands of investment vehicles, including some of the best alternatives to SHIB.
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