Dogecoin, a crypto token that started as a joke, is now worth serious money. It is now challenged by an upstart, a puppy-themed competitor: Shiba Inu (SHIB).
The price of the Dogecoin spin-off, Shiba Inu, has doubled in the past two weeks following speculations of a huge whale purchase, and of course, our favorite, Elon Musk.
According to CoinMarketCap (1), the crypto coin is still worth below a penny and is trading at 0.00002587 USD, with over 10.18 billion USD market cap as of writing this story. However, it is up from 0.000007208 USD on September 30th, a jump of about 280%.
Know the Shiba Inu Coin
Shiba Inu, an obvious spin-off of Dogecoin, featuring a Shiba Inu dog as its mascot, was created in August last year. However, we don’t know much about its founder, who goes by the name Ryoshi.
At the time of its inception, Ryoshi had promoted the token as “Dogecoin Killer,” with an argument that SHIB’s technology is more “community-driven” than its counterpart, Dogecoin.
Ryoshi wrote in a SHIB “wood paper,” also known as a white paper, heralding its minuscule worth, “We can outpace the valuation of Dogecoin, exponentially, without ever crossing the 0.01 USD market.”
On the official website (2), Shiba Token calls itself “a decentralized meme token that evolved into a vibrant ecosystem.”
Besides other crypto exchanges, Shiba Inu also has its decentralized exchange called ShibaSwap.
According to Binance (3), last updated in May 2021, the total supply of Shiba Tokens is 1,000,000,000,000,000 (one quadrillion), and the circulating supply at present is 100%.
The official website states that 50% of the total supply of the crypto coin has been locked in Uniswap. This decentralized finance protocol expedites automated transactions between crypto coins on the Ethereum blockchain.
Ryoshi claims not to be holding any SHIB coins (4).
The Ethereum co-founder, Vitalik Buterin (5), has the remaining 50%.
In theory, it gives Buterin the ability to control the market and crash SHIB’s value single-handedly if he decides to sell his holdings. However, the move was intentional.
According to David Hsiao, the CEO of Block Journal (6), “the SHIB army believes that all successes need some form of vulnerability.”
The official website states that “everyone has to purchase the tokens from an open market, ensuring a complete and fair distribution where developers don’t own any tokens to dump on the community.”
However, as per Binance, the top no 1, 2, and 5 wallers hold 50.5%, 7%, and 3% of the total amount, respectively.
The SHB coin had lived in relative obscurity until August this year when a surge in interest for Dogecoin, retail traders fueled by GameStop frenzy turned to joke cryptocurrencies and find the next big thing (7).
Notably, the coin’s mascot is the Shiba Inu dog, the same dog breed representing Dogecoin. The crypto token has also called itself the “Dogecoin Killer.”
Reasons Behind Shiba Inu’s Price Surge
The price of Shiba Inu has dramatically increased over the last two weeks, following the reports of a huge whale buy.
Investors are continually pouting into the digital currency, which came to the spotlight amid the Dogecoin explosion earlier this year.
At that time, in July 2021, the TVL, the total value locked of Shiba Inu, a crypto coin, which may have been a joke of a joke, had surged to more than 2 billion USD. Later, the value dropped below 300 million USD. However, it didn’t stop a mysterious whale from purchasing massive amounts of Shibu Inu tokens (8).
As per media reports, a recent transaction from late September indicated that the unknown individual had purchased that the unknown whale purchased more than 6.2 trillion SHIB for about 44 million USD.
The price of SHIB witnessed a striking increase, as you can see in the chart image from CoinMarketCap above.
As per the cited report, it is not the only reason why SHIB received a boost. Ishan Arora, a partner at Tykhe Block Ventures, a crypto hedge fund (9), claimed that Shiba Inu might launch a new project soon.
He stated that Shiba Inu was started as a meme coin with no real use case. But, things appear to have changed since then. And now, the developer team appears to be working on certain things, such as a decentralized exchange.
In addition, the recent surge may be attributed to Dogecoin advocate and CEO of Tesla, Elon Musk, who had recently shared a picture of his new family member, a Shiba Inu puppy, whom he named “Floki.”
We have also previously discussed how Elon Musk is hugely influential in crypto markets in our previous story, Elon Musk’s Influence on the Cryptocurrency Space. Tesla’s boss is also a key player in the digital-asset boom this year. Notably, even his minor interventions have sparked off big moves in the crypto markets (10).
Earlier this year, his commentary and hints on social media platforms have led to wild swings in Bitcoin and Dogecoin.
The tweet also had nothing to do with Shina Inu tokens. However, it was enough to send his supporters to flock to purchase the coin, boosting its value.
Even in the past, Musk has been a vocal supporter of Dogecoin (11), on which SHIB is heavily based. However, there is no clarity on how much of that support is a joke.
Nonetheless, the rally has witnessed Shiba Inu’s market capitalization, with the total value of the existing tokens nearing 12 billion USD. As per CoinMarketCap (12), it has now reached among the top 15 most prominent cryptocurrencies ahead of Stellar, Bitcoin Cash, and Algoran.
SHIB’s rise also seems to be uplifting Dogecoin, which has increased about 32% over the last week.
According to analysts at the Kraken Exchange (13), “several market participants see a rotation back into dog coins or meme coins as inevitable. While we can expect capital to flow back into these names should the last quarter prove to be as promising as most of us expect it to be. However, there is no guarantee that the momentum holds up in the short run.”
As per itsblockchain.com’s founder, Hitesh Malviya (14), “meme coins are generally overcrowded by retail investors because of their cheap entry levels and strong community engagement.”
Malviya further pointed out how retail investors often follow Musk’s lead whenever he posts anything related to cryptocurrencies, like Dogecoin or any other meme token.
SHIB is no exception. Notably, every meme crypto token with “Inu” in it has skyrocketed recently. SafeMoon Inu jumped over 185% in the past three days whereas, CateCoin has soared over 510% in the past week.
Over the past weeks, even other lesser-known meme tokes like Shih Tzu, Kishu Inu, Akita Inu, Hokkaidu Inu, SafeMoon Inu, and Husky have rallied between 200 to 500%.
According to market experts (15), meme tokens are extremely volatile crypto assets within the world of already volatile cryptocurrencies. There are hardly any fundamental reasons behind the rise of meme tokens.
Supporters of these meme cryptocurrencies believe that memes (conveying a certain idea or point) are the currency of the internet. And they are gaining prominence, especially among the younger population.
“There is mostly FOMO, fear of missing out for the retail investors which further the rally. There is hardly any value in such a meme token. If there is no social media buzz, such coins will find it tough to survive,” stated Edul Patel, Co-founder and CEO of Mudrex (16).
According to market experts, the overall crypto market is still in a nascent state. Hence, it responds to figures like Elon Musk, who seems like the darlings of the crypto universe.
The only strength these meme coins have is their strong communities. According to Malviya, “communities have played a huge role in the crypto industry since its emergence.”
Do you also want to develop a strong community for your brand? Read our story Strong Brand Community: A Key to Success for more details.
Crypto veterans recommend investors stay away from these euphoria-based crypto coins. According to them, value creation happens long-term, and investors should follow a buy-in-dips approach.
They warn investors to stay off such meme coins and avoid investing their hard-earned money in them.
According to Malviya, “such tokens have thin order books which one can easily manipulate by a sell order by a whale or one big purchase.”
In other words, investors should find out how much community is linked to a particular joke token before investing in it.
Shiba Inu has a strong community link, even in India. It is listed in most big venues, including Coinbase, which has particularly strict listing norms, says Gaurav Dahake, CEO of Bitbns (17).
Is SHIB a Good Investment?
Sure, if you want to invest in it for the short-term and gain from the moment. However, it would be best if you bear in mind that the fate of your investment would then lie in the hands of people using Shiba Inu as a joke on Twitter.
However, if you are looking for a long-term investment, it is probably a horrible idea because of several red flags surrounding the token, including:
Limited Use Cases
It is a meme coin, and hundreds of other crypto tokens already cover limited use cases like fund transferring.
“While Dogecoin has some real merit as one of “fun crypto coins,” SHIB is a far more cynical and manipulative asset. It has no real purpose or use cases. Investors should not invest any money in a meme currency that they can’t afford to lose,” stated Antony Portno, Traders of Crypto Founder (18).
Highly Volatile Nature
Even though Binance listed Shiba Inu in the innovation zone, according to its managers (19), “it is a relatively new coin that poses a higher risk compared to normal and is subject to high volatility.”
The owner of the Shiba Token platform is an anonymous individual that calls himself “Ryoshi.” In addition, it has no named or known team members.
Keep on reading if you still wish to invest in the SHIB token.
Should You Go Ahead and Invest in SHIB?
But only if you are a speculative crypto investor.
According to an article published on NASDAQ (20), the purpose of meme tokens like Shiba Inu, citing Decrypt magazine, is not to unlock any utility on some protocol or deploy as votes on any governance decisions. Their purpose is different.
The real purpose is to trade them with the hope that at some point, a critical mass of users will develop, as in the case with Dogecoin in its early days.
According to Decrypt, it has happened with the institution of ShibaSwap, a profitable Shiba Inu-based decentralized exchange. The platform allows users to pool, trade, and stake in crypto tokens. There are multiple videos on social media platforms about purchasing and trading SHIB or exchanging them for other tokens and coins.
However, since Binance and Coinbase have listed SHIB, the exchange has probably lost a good deal of its utility since we can trade almost any major cryptocurrency on these two big exchanges.
Nonetheless, it is a potential speculative investment. Most individuals should probably not invest in this coin unless they have a high degree of patience and a gambling mentality.
Or, at least, one should have a curious spirit and willingness to lose their money in any SHIB investment.
This would likely rule out over 90% of the crypto investors.
And considering the highly volatile nature of this crypto-token, it is not suitable for most investors.