After a monster return in 2021, dog-inspired cryptocurrency Shiba Inu (SHIB -0.97%) has come crashing back to Earth. In 2022, SHIB, the native token, has lost 68% of its value (as of this writing). General weakness in the overall crypto market, coupled with more realistic expectations about this specific digital asset, are the reasons for the price drop.
After all this, Shiba Inu is still the 14th most valuable cryptocurrency, with a market value of $6.1 billion. But can it one day reach $1 per token from today’s $0.000011? Continue reading to find out if Shiba Inu can make its biggest supporters rich along the way.
What is Shiba Inu?
Seeing limitations in how Dogecoin was structured, the anonymous founder of Shiba Inu wanted to add greater functionality, so it was built on top of the Ethereum network. This makes it compatible with the Ethereum ecosystem, a strategy that was designed to draw more interest from developers and users in the crypto world.
Shiba Inu’s initial supply of 1 quadrillion tokens (that’s 15 zeroes) is absolutely mind-boggling. Half of this amount was sent to Ethereum co-founder Vitalik Buterin, who sold $1 billion worth to donate to India’s pandemic relief fund. Buterin then burned, or sent to a dead wallet, another 40% of the tokens. These moves helped bring Shiba Inu into the spotlight.
However, Shiba Inu has no real competitive advantage in the world of cryptocurrencies, and there are more promising projects like Ethereum and Cardano when it comes to use cases like decentralized finance and non-fungible tokens. These blockchains also have attracted much greater interest from speculators, users, and developers. This makes the possibility of Shiba Inu ever reaching $1 very unlikely.
Why a $1 price target is unlikely
There are three specific developments that could help push up SHIB’s price. Continuing to burn tokens, as Vitalik Buterin did, is one of these catalysts. The premise of this tactic is that reduced supply, coupled with higher demand, will boost SHIB’s price. I see this as nothing more than financial engineering. And with such a gargantuan supply of tokens, 549 trillion to be exact, a lot of burning would need to happen.
Another catalyst is the development of the network. A Layer-2 solution, known as Shibarium, is supposedly in the pipeline as a way to increase the functionality of the network while lowering transaction fees. Additionally, ShibaSwap 2.0, an upgraded decentralized exchange, and a Shiba Inu metaverse are in the works. The overarching goal is to bring on more users, which would support demand for SHIB and drive up its price. But again, these updates can’t compete with Ethereum’s dominance.
And lastly, like many meme-inspired cryptocurrencies, Shiba Inu’s price could receive a boost by way of another huge hype cycle on social media. This has propelled other cryptos, most notably Dogecoin, to prominence. But it isn’t something to bank one’s hard-earned savings on. Trying to predict a specific cryptocurrency’s price moves based on how much buzz it might get on the internet seems like an impossible task.
If Shiba Inu were ever to reach $1 per token, this would mean that the cryptocurrency network’s entire market value would be a whopping $549 trillion. That’s more than the amount of total global wealth, as estimated by consulting firm McKinsey & Co. Clearly, this aspirational price target is all but impossible.
Buying SHIB today would be akin to gambling, and therefore, it’s best for investors to stay away from this token.
Neil Patel has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum. The Motley Fool has a disclosure policy.
This news is republished from another source.