"Limiting the supply, setting the coin price to extremely low decimals, timely posts on Twitter, and gifting Shiba Inu coins to Ethereum co-founder Vitalik Buterin are all part of what captivates speculators," wrote Mike McGlone, analyst at Bloomberg Intelligence, in an October 29 note. "Shiba Inu presents a unique combination of exploitation, good marketing, ESG, supply versus demand economics and gaming on an unprecedented 24/7 global scale, and is facing a reversal worthy of its parabolic rise ".
After rising in price for most of October, Shiba Inu has plummeted in recent days. The coin, each of which is trading for small fractions of a penny, is currently down about 30 percent in the past 24 hours and has fallen about 48 percent from its October 27 peak to $ 0.00004546. Thursday (US time), according to CoinMarketCap.com.
"For cryptocurrencies without an underlying economy, whose value is determined only by speculation, concentrated ownership suggests a rigged game."
Crypto Investor Aaron Brown
Shiba Inu is not the first currency to raise concerns about the high concentration of ownership. Initially, Bitcoin and Ethereum were heavily influenced by whales whose trading could influence market prices. Since then, its concentration of ownership has declined, as more institutions and retail investors have launched into cryptocurrencies. That said, even today around 2,000 addresses own more than 40 percent of all Bitcoin, according to BitInfoCharts.
There are many pockets of the cryptocurrency market where coin ownership is still highly concentrated. Many of the smallest of the 13,500+ cryptocurrencies are majority owned by a handful of wallets. In decentralized finance apps, which create their own tokens to allow people to trade, lend, and borrow from each other, a small percentage of users control everything. Between 20 and 50 crypto trading companies "are driving most of the volume in crypto," said Antonio Juliano, founder of the DeFi dYdX exchange.
"I don't think it's that totally different from the way things work in traditional finance," he said. "Big Wall Street Funds Drive Most of Volume."
Charging
Still, the lack of official market regulation and oversight leaves meme coins like Shiba Inu vulnerable to suspicion, even as their rise in price brings them to a wider and more pervasive audience. While it is available to trade on the Coinbase exchange, others such as Kraken and Robinhood have resisted so far, despite vocal lobbying from their clients.
"Legitimate cryptocurrencies have a strong underlying economic case, their value is not highly dependent on who has the amount," adds Brown. "But for cryptocurrencies without an underlying economy, whose value is determined only by speculation, concentrated ownership suggests a rigged game."
Bloomberg
