Perhaps no cryptocurrency has rewarded investors more in recent years than Shiba Inu (SHIB -4.26%). Although this dog-inspired token is currently 89% below its all-time high price in October 2021, it has still skyrocketed nearly 12,000,000% since its introduction in August 2020. Perhaps some investors They are willing to buy the dip in the hope of making monster profits.
But I think this would be a costly mistake. In fact, Shiba Inu is a cryptocurrency that is better avoided. Instead, take a closer look bitcoin (btc -6.42%).
The world's leading digital asset is poised for an incredible run.
Shiba Inu is extremely speculative
Shiba Inu is a block chain network built on Ethereum, making it compatible with a wide range of decentralized applications and cryptocurrency wallets. The problem, however, is that Shiba Inu lacks any kind of competitive advantage compared to the tens of thousands of tokens out there. It is not even among the top 100 cryptocurrencies in terms of the number of developers working on it, which does not bode well for its future in driving utility and adoption.
To its credit, Shiba Inu has attracted a fervent community of followers, which helps explain why its market capitalization is $6 billion, making it the 16th most valuable cryptocurrency in the world. Having strong supporters is important and adds value, but it's not something investors should leave their hard-earned savings behind.
What happens if the hype surrounding Shiba Inu starts to dissipate? There is no way to predict this in advance. And it adds a lot of risk to the equation.
Things may already be going in the wrong direction. In 2023, the value of the Shiba Inu token increased by around 30%. This lagged significantly behind Bitcoin's gain of over 150% or Ethereum's rise of over 90%. And it was a performance worse than even the Nasdaq Composite index. In what was a raging bull market for risk assets, the fact that Shiba Inu lagged in returns could signal that investor enthusiasm may have waned for good.
Those who want to add Shiba Inu to their portfolios should understand that this endeavor is more like a game of chance than a true investment. And this should be avoided.
Bitcoin has unreal potential
Even after Bitcoin's huge gain last year, it is primed for another run not only in 2024, but in the long term. The approval of Bitcoin spot exchange traded funds will help make it a legitimate financial asset and open the floodgates of new institutional capital into the mix. Higher demand supports a higher price.
The next halving, scheduled for April, will reduce the growth rate of Bitcoin supply by 50%. Historically, this has been an extremely bullish development. Several months after halving, the crypto has typically reached new all-time highs.
However, what makes Bitcoin truly special is that it is a decentralized asset that no entity controls. Furthermore, Bitcoin will be absolutely finite because there will only be 21 million coins in circulation.
Some see this as a huge improvement compared to the current financial system. Central banks around the world have devalued fiat currencies throughout history, printing money and adjusting Interest rates with no end in sight, causing uncertainty regarding inflation and economic activity. America's $34 trillion public debt burden, which will continue to rise, demonstrates the problem.
Bitcoin is the firm and nonchalant solution to this. In other words, it can be seen as a hedge against financial catastrophe.
Investors looking for a safer cryptocurrency to buy, one that solves a serious problem in the world and has huge long-term advantages, should consider Bitcoin instead of the more speculative Shiba Inu.
Neil Patel and their clients have positions in Bitcoin. The Motley Fool holds and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
