Shiba Inu: 5 Reasons He May End 2022 Below $0.00001

Over the long term, the stock market has been a virtually unrivaled wealth-creating machine. It may not outperform bonds, commodities or housing every year, but the average annual return of stocks over the past century leaves these other investment vehicles in the dust.

But over the past two years, cryptocurrencies have overtaken the stock market several times. While the biggest names in crypto often get all the glory, it’s the same coin shiba inus ( SHIB 3.05% ) it delivered what might be the most historic win we’ll ever see.

Shiba Inu-inspired tokens exploded in 2021. Image source: Getty Images.

Shiba Inu had a record in 2021

When the clock struck midnight on January 1, 2021, a single SHIB token could have been purchased for a microscopic $0.000000000073. But less than 10 months later, on October 27, Shiba Inu would hit an all-time high of $0.00008841. Yes, it’s still a microscopic number, but there are six less zeros after the decimal point. For those keeping score at home, SHIB gained as much as 121,000,000% on an intra-year basis before closing the curtain on 2021 with a gain of around 46,000,000%.

Several factors went into Shiba Inu’s historic year. For example, it has received a lot of additional visibility and improved liquidity due to its listing on many crypto exchanges.

To capitalize on this point, the launch of the decentralized exchange ShibaSwap in July 2021 further improved liquidity and gave investors the ability to stake their coins. Since October, the median holding period for SHIB on the major crypto ecosystem Coinbase went from just six days to 99 days, starting March 18.

As I have pointed out before, the dynamics of the crypto market also helped. As it is much more difficult for skeptics to bet against lesser-known digital currencies than to short stocks or buy derivatives (e.g. a put option), there is a sort of inherent buying bias. to the crypto market.

When the curtain closes on 2022, SHIB could be much lower than it is now

But for a year as exceptional as Shiba Inu, there is a very realistic possibility that he will add, not subtract, another zero after his comma in 2022. Here are five reasons why Shiba Inu may end 2022 below zero, $00001.

A digital map of the world partially filled with binary code and blockchain nodes.

Image source: Getty Images.

1. It lacks differentiation and utility

Arguably the biggest problem with Shiba Inu is their complete lack of differentiation and competitive edge.

According to CoinMarketCap.com, there are over 18,000 digital currencies listed, which means it’s getting harder and harder to stand out. In the case of Shiba Inu, it is nothing more than an ERC-20 token built on the Ethereum blockchain. Or, in simpler terms, it’s just a payment coin. There is nothing special about payment coins, which makes it unlikely that Shiba Inu can maintain a high market value of $12 billion.

To add, Shiba Inu is not even a particularly popular payment piece. On the one hand, optimists might point to the number of merchants accepting SHIB jumping from a few dozen in October to 646 in mid-March, according to online business directory Cryptwerk. On the other hand, there are over 32 million businesses in the United States alone and north of 500 million entrepreneurs worldwide. The majority of companies accepting SHIB for payment are obscure online companies. In short, SHIB has next to no real-world use.

2. Crypto has not been able to decouple from the stock market

Another big problem for Shiba Inu and his peers is that the crypto market has become increasingly intertwined with Wall Street. That is to say, cryptocurrencies and Wall Street have risen and fallen together in recent months.

With the crypto market unable to create its own identity, it could be facing a tough time. Indeed, the Federal Reserve recently raised lending rates for the first time in four years and estimated that six more 25 basis point hikes could be on the way in 2022. With inflation soaring, the rising lending rates and inverting Treasury yield curves. , the game appears to be stacked against stocks this year.

A person wearing headphones playing games on a smartphone during an Esports tournament.

Image source: Getty Images.

3. The Shiba Inu metaverse is still a long way off

A third reason Shiba Inu is faltering through 2022 is the waiting game investors have to play when it comes to the Shiba Inu metaverse. The metaverse being the next iteration of the internet that allows connected users to interact with each other and their surroundings in virtual 3D environments.

Recently, the developers of Shiba Inu announced plans to sell digital lands (known as Shiba Lands) in their version of the Metaverse. The announcement came after it unveiled plans to develop blockchain-based games as well.

While this may all sound exciting, the Metaverse and Shiba Inu games are set to launch after a number of other competing projects. With protocol revenue having already dropped significantly for a few blockchain-based gaming projects, it’s unclear if Shiba Inu’s metaverse or non-fungible token (NFT)-based game will even have much of an audience. at the time of its launch.

4. NFT interest fell off a cliff

Another thing that should concern Shiba Inu investors who are passionate about the metaverse and NFT-based games is the sudden drop in interest in NFT.

OpenSea, the largest NFT marketplace, accounted for $3.16 billion out of $3.25 billion in total NFT sales last August, resulting in $386 million in monthly fees. In February, paid revenue from NFT sales fell by about half. As of this month, revenue from NFT fees is expected to reach just $14 million. Daily NFT volume and royalty revenue collected by OpenSea have fallen off a cliff.

For Shiba Inu to maintain his momentum higher, he will need a gigantic push from the game and his metaverse ambitions. For now, it looks like investors have had enough of the brief NFT craze.

A visibly worried person looking at a rapidly rising and then plunging stock chart on a tablet.

Image source: Getty Images.

5. History is not his friend

The fifth and final reason why investors shouldn’t be surprised to see Shiba Inu trading below $0.00001 by the end of the year is historical.

Over the past five years, there have been a few examples of payment coins or protocol tokens on payment networks offering life-changing payouts over a short period of time (usually a year or less). After hitting their respective highs, nearly all of these payment coins and protocol tokens lost between 93% and 99% of their value over the ensuing 12-26 months.

The closest example to Shiba Inu that I can find is the privacy room Edge, which galloped nearly 1,200,000% in one year. Privacy coins are designed to obscure the sender and receiver of a payment. After peaking, Verge lost 99.6% of its value in about two years. Shiba Inu’s maximum gain was about 100 times greater than Verge’s, which leads me to believe that an equally large reversion still awaits.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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