Bitcoin
Shiba Inu Outperformed Bitcoin in H1 2024, But Can It Reach $1?
Sentiment is improving in the cryptocurrency sector this year, and it is boosting even the most speculative tokens.
The combined market capitalization of all cryptocurrencies peaked at $2.9 trillion in 2021 before falling 72% in 2022 to just $826 billion due to several high-profile failures in the sector.
Sentiment has improved since then as regulators cracked down on bad actors and also thanks to the approval of exchange-traded funds (ETFs) to Bitcoin (BTC 5.64%), which has added some legitimacy to the cryptocurrency industry. Bitcoin has surged 44% in the first half of 2024 alone and is approaching a new all-time high, but an unlikely meme token has fared even better.
A rising tide lifts all boats
Shiba Inu (SHIB 6.99%) has soared 61% in the first half of this year, but unlike Bitcoin, it has not had ETF approvals or any other specific catalyst supporting its gains. The same speculative fever that drove Shiba Inu to a 45,278,000% return in 2021 — which could have turned a $3 investment into $1 million — appears to be gaining momentum once again.
Unfortunately, that run ended in a spectacular crash that saw the meme token plummet 92% from peak to trough. Despite this year’s strong gain, it is still trading 80% below its all-time high.
Speculation is enough to send Shiba Inu on another historic run? This time, could it rise to $1 per token from its current price of $0.000016?
Lack of positive catalysts
Shiba Inu has no utility outside of some obscure use cases within the cryptocurrency world. According to Cryptwerk, only 949 merchants accept the token as payment for goods and services. If consumers can’t spend their Shiba Inu tokens, there’s little point in holding them, except under the assumption that someone will come along and pay a higher price for them in the future (in other words, speculation).
Developers are trying to improve Shiba Inu to drive adoption. They launched Shibarium last year, which is a Layer-2 blockchain solution that solves some of the inefficiencies in the legacy Ethereum The network on which Shiba Inu was originally built. Basically, using Shiba Inu tokens for transactions is now faster and cheaper. A Layer-3 upgrade is also in the works, which could improve things like privacy.
Developers are also creating new use cases for Shiba Inu. They’ve been working on a metaverse since 2022, where the token can be used to personalize digital plots of land with custom images and names. Unfortunately, progress seems to have stalled, and there’s no firm release date for the virtual world. The developers have also created a digital card game called Shiba Eternity, which is designed to promote the Shiba Inu ecosystem.
Unfortunately, none of these initiatives are likely to drive widespread adoption, which is what Shiba Inu really needs to tame its volatility and sustain its value in the long term.
Image source: Getty Images.
The Path to $1 Is Plagued by a Mathematical Hurdle
Shiba Inu faces a challenge that is even greater than its lack of bullish catalysts. There are 589.26 trillion tokens in circulation, which is a massive amount of supply, and is the reason why they trade at $0.000016 each instead of a more conventional price (like $1 or more).
Simple math dictates that if Shiba Inu were to rise to $1 per token, its market cap would be a whopping $589.26 trillion. This means that Shiba Inu would be worth 165 times more than it was. Litterwhich is currently the largest company in the world. It would also be more than five times more valuable than the entire global economy, which generated $105 trillion in gross domestic product last year.
To be clear, there is no viable way for Shiba Inu to stage a run to $1. Investors looking to invest in the cryptocurrency space may be better off sticking with the industry leader, Bitcoin. It has never been easier to buy it thanks to ETF launches earlier this year.
Anthony DiPizio has no position in any of the stocks mentioned. The Motley Fool is positioned in and recommends Apple, Bitcoin, and Ethereum. The Motley Fool has a disclosure policy.