Can Shiba Inu reach $0.0001 in 2022?

Looking back more than a century, no asset class has more effectively created wealth for investors than the stock market. Even though equities have sometimes taken precedence over bonds, commodities or real estate, they have easily outperformed the average annual return of other asset classes over very long periods.

But in the short term, it’s a whole different story. Since the pandemic lows established two years ago, cryptocurrencies have been circling the stock market. While top-notch digital currencies, Bitcoin and Ethereumoften get all the credit for these wins, coins like shiba inus ( SHIB 1.22% ) are generating excitement in the crypto space.

Shiba Inu themed tokens were on fire in 2021. Image source: Getty Images.

Shiba Inu recorded historic gains last year

For those who may not be familiar with Shiba Inu, he produced what might be the highest yield ever seen in a single year. The Shiba Inu tokens could have been picked up at midnight on January 1, 2021, for a microscopic $0.000000000073 each. By the end of October, when SHIB reached an all-time high of $0.00008841, investors who had held throughout the year had risen by (drum roll) 121,000,000%! Shiba Inu ultimately ended the year up about 46,000,000%. This means that it would only have taken an investment of a few dollars to become a millionaire in 12 months.

Shiba Inu’s historic year was mainly made possible by the dynamics of the crypto market and increased visibility.

In the stock market, it’s relatively easy to bet against a security if you think it’s going to go down. This can be done by shorting shares of the company or buying a derivative, such as a put option.

These same means of betting against a security do not always exist in the cryptocurrency space. Although some crypto exchanges allow investors to short sell cryptocurrencies, the practice is much less common. Also, outside of Bitcoin, there are no derivative options for skeptics to fall back on. The thing is, the cryptocurrency space has built-in natural buying biases for lesser-known tokens.

Increased visibility was also essential. Shiba Inu has been listed on a number of new crypto exchanges over the past year which has helped improve liquidity. Additionally, the launch of the decentralized exchange ShibaSwap in July further boosted liquidity and provided the opportunity for holders to stake their tokens. Staking has significantly increased the median holding period of SHIB tokens.

The big question now is: Can Shiba Inu replicate their success in 2022 and remove yet another zero after their comma?

A person interacting with a laptop that displays a rapidly increasing graph with an increasing trend line.

Image source: Getty Images.

Here’s what needs to happen for SHIB to hit $0.0001 in 2022

If the cryptocurrency space has demonstrated anything, it’s that anything is possible under the right circumstances. After all, Bitcoin has gained as much as 8,000,000,000% in 11 years. But if SHIB is indeed going to quadruple in value and hit $0.0001 in 2022 (at a market value of $55 billion), a few things are going to have to happen.

Arguably the most important step is for the deployment of the Shibarium layer 2 blockchain project to happen as soon as possible.

Shiba Inu is an ERC-20 token built on the Ethereum blockchain. Although Ethereum is a trusted network that has seen a steady increase in average daily transaction count over the past five years, it is also prone to congestion and exceptionally high transaction fees. The latter makes it particularly difficult to use SHIB for small purchases in a real environment.

Shibarium is a layer 2 blockchain specially designed to reduce transaction fees. If SHIB can become more competitive from a fee perspective, merchants might be more willing to accept it as a form of payment. Shibarium is expected to launch in the public setting in the first half of 2022.

If (keyword!) the Shibarium launch is successful, the next major catalyst is the continued development of games based on non-fungible tokens (NFTs).

The developers have already announced their intention to sell Shiba Lands in their own metaverse. These digital lands will be stored as NFTs. Buying and selling these NFTs should be relatively inexpensive, which is why Shibarium is so important. Because the Metaverse is a multi-trillion dollar opportunity, investors’ imaginations could run wild depending on what the development team announces regarding NFT-based games in the second half of 2022.

Finally, the social media buzz would likely need to reach new highs for SHIB to see $0.0001. Last year, Shiba Inu was the fourth most searched cryptocurrency in the United States. If the confirmation bias is strong enough on social media, Shiba Inu could push much higher.

A person using a pin to pop a bubble with a green dollar sign inside.

Image source: Getty Images.

Although possible, Shiba Inu reaching $0.0001 in 2022 is highly unlikely

If all goes well for Shiba Inu and the buzz created on social media was even more visible than in October, SHIB could, in theory, reach $0.0001. But my view remains unchanged: it is very unlikely to reach $0.0001 in 2022, and could even become one of the biggest underperforming digital currencies this year.

Shiba Inu issues really come down to competition, usefulness, and historical precedence.

According to CoinMarketCap.com, there are approximately 18,000 cryptocurrencies. Only a very small number of these projects are likely to stand out. Although he has managed to create buzz on social media, Shiba Inu does not offer anything substantial that would allow him to stand out over a long period of time. As noted, it’s nothing more than an ERC-20 payout coin at the moment. Without real differentiation, it will be nearly impossible for Shiba Inu to reach a valuation above $50 billion.

In terms of usefulness, Shiba Inu doesn’t offer much. If there’s a half-full prospect here, it’s that the number of merchants accepting SHIB as a form of payment has grown from a few dozen in October to 642 by March 7. The flip side is that the 642 SHIB-accepting merchants, according to the online business directory Cryptwerk, are mostly obscure and represent a tiny number of businesses worldwide. In other words, SHIB offers very little real-world use.

But the biggest worry of all, at least in 2022, could be the historical priority. Following earth-shattering gains in other payment coins and protocol tokens on payment networks, it has become common for these tokens to lose 93%-99% and more of their value within 12-26 months of their release. peaks. Given that Shiba Inu gained 121,000,000% on an intra-year basis at its peak, a huge rollback is likely.

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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