Can Shiba Inu reach $0.01 by 2023?

IIf you think Wall Street has made impressive gains since the pandemic ended in March 2020, take a closer look at the cryptocurrency space. While the broad base S&P500 has effectively doubled in value since its March 2020 low, the aggregate value of all digital currencies has skyrocketed by almost $1.7 trillion, or more than 1,200%, over the same period.

As you can imagine, the two crypto giants, Bitcoin and Ethereum (CRYPTO:ETH), played an important role in this nominal increase in the market value of digital currency. But don’t neglect the coin itself shiba inus (CRYPTO: SHIB)whose historic gains have attracted new investors to the crypto arena.

Shiba Inu themed rooms were hot in 2021. Image source: Getty Images.

Historic 2021 Shiba Inu Returns May Never Be Repeated

On the stroke of midnight on January 1, 2021, investors had the opportunity to purchase SHIB tokens for a microscopic $0.000000000073. Less than 10 months later, those same coins would hit an intraday high on October 27 of $0.00008841. It can be hard to do the math with so many zeros after the decimal, but in less than 10 months Shiba Inu have grown 121,000,000%! Even after a considerable pullback from its all-time high, SHIB tokens ended 2021 up around 46,000,000%. We may never see a single-year gain of this magnitude again.

Shiba Inu’s historic gains are primarily the result of unique cryptocurrency trading dynamics and vastly improved visibility. Regarding the former, it is sometimes difficult for skeptics to bet against cryptocurrencies not named Bitcoin. Some crypto exchanges do not allow short selling and there are no derivative products (e.g. futures or options) to bet against lesser-known coins like SHIB. This created a natural buying bias for Shiba Inu in 2021.

Meanwhile, Shiba Inu has also benefited from numerous new crypto exchanges accepting his coin for listing, as well as the launch of decentralized exchange ShibaSwap in July. ShibaSwap has increased liquidity and introduced staking, which allows SHIB holders to earn passive income. Since SHIB’s October moonshot, the median token holding period on Coinbase Globalthe first crypto exchange, went from just six days to 111 days.

With such a historic performance on the books for 2021, SHIB holders are wondering if the oft-touted $0.01 price target could be reached as early as 2023.

A penny stood sideways above a newspaper clipping of a rapidly rising stock chart.

Image source: Getty Images.

A penny for the thoughts of Shiba Inu owners

For Shiba Inu to reach $0.01, his token would need to rise nearly 45,000% from where it was at the time of this writing ($0.0000222) on April 11, 2022. That might seem like a impossible figure, but the holders are counting on a number of short-term catalysts to send SHIB to the moon, once again.

The biggest catalyst is the planned launch of the Shibarium layer 2 blockchain project around the middle of this year. Shibarium is an in-house developed blockchain solution specifically designed to reduce transaction fees. According to a post on Medium earlier this year, Shibarium was being tested on private networks.

Since Shiba Inu is an ERC-20 token built on the Ethereum blockchain, it is currently subject to the same processing delays and high transaction fees that sometimes plague the Ethereum network. Reducing these transaction fees is key to supporting increased use of SHIB, as well as promoting additional ecosystem functionality.

What do I mean by “ecosystem characteristics?” For example, lower transaction fees are needed before the Shiba Inu development team can launch games based on non-fungible tokens (NFTs). Buying and selling NFTs on marketplaces cannot be done profitably without Shibarium significantly reducing transaction fees.

Additionally, the developers have announced plans to sell digital lands, known as Shiba Lands, in an effort to enter the metaverse, i.e. the next iteration of the internet, which allows connected users to interact with other users and their virtual 3D environment. worlds. These “Shiba Lands” will be stored as NFTs.

Finally, SHIB holders rely on coin burning to significantly increase the price of the token. Just as a stock buyback (in theory) makes each remaining share much rarer and more valuable, sending SHIB tokens to dead blockchain addresses can reduce the supply of coins in circulation and make each remaining token more valuable.

A hundred dollar bill on fire atop a lit stove burner.

Image source: Getty Images.

A trip to the niche is more likely than $0.01 by 2023

While there’s no doubt that Shiba Inu has a lot more to do now than he ever did during his 2021 high, the chance of SHIB reaching $0.01 in 2023 is pretty much nil for various reasons.

For example, even though Shibarium is designed to reduce transaction fees, this is unlikely to change the fact that Shiba Inu is ultimately nothing more than a payment coin built on the Ethereum network. There are thousands of digital currencies that can serve as payment coins, and there is nothing particularly special or unique about what Shiba Inu offers users on the payment front. Without anything resembling competitive advantage or sustainable differentiation, Shiba Inu is likely going to struggle to stand out in the rapidly growing crypto arena.

It’s also unclear how successful Shiba Inu will be with his NFT gaming and metaverse ambitions. Not only does the launch of NFT-based games appear to be around a year away – allowing competition to go further – but interest in NFTs has dwindled considerably in recent months. According to data from Google Trends, interest in the search term “NFT” decreased by 68% between the start of 2022 and the first week of March.

Another reason for concern is the likelihood that the burning of parts will turn out to be minimal. Shiba Inu took good advantage of Ethereum founder Vitaly Buterin, who burned over 410 trillion coins last year. But with 549 trillion coins still in circulation and no burn event even remotely approaching what Buterin did last year, the coin burn is unlikely to have much, if any, impact. on the future of SHIB.

Finally, as I’ve noted before, skyrocketing payout coins and protocol tokens often end up returning the lion’s share of their earnings within 12-26 months of their respective peaks. The payment and protocol tokens I have reviewed have all fallen 93%-99%+ within 26 months of reaching all-time highs. This makes it much more likely that Shiba Inu will head into the niche than $0.01 by 2023.

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Sean Williams has no position in the stocks mentioned. The Motley Fool owns and recommends Bitcoin, Coinbase Global, Inc., and Ethereum. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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