After a brutal year-long crypto winter, the cryptocurrency market appears to be gearing up for a potential bull run. With the total cryptocurrency market capitalization nearly doubling in 2023, there is a renewed sense of optimism across the industry.
Amid this resurgence, it is worth taking a look at some of the best performers from the previous bull market, such as meme coin. Shiba Inu (SHIB -1.19%). Just a few years ago, it had a monumental run, surging by over 28,000,000% in 2021. Now that things are starting to look up in cryptocurrencies once again, will Shiba Inu be able to ride this new momentum and rise to the elusive mark? 1 dollar?
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Too little too late?
Shiba Inu arrived in 2020 and is now ranked 17th among the most valuable cryptocurrencies today. While Shiba Inu was created as a meme currency, meaning it lacks any real utility, the community and developers have diligently sought to alter this narrative over the past year.
In an attempt to shed its meme currency status, Shiba Inu has undergone a transformation by integrating new functionalities commonly found among the most established and valuable cryptocurrencies. Today, Shiba Inu holders can participate in yield farming where holders earn rewards for locking up their cryptocurrencies and acquiring them. non-fungible tokens (NFT)and participate in lending and borrowing protocols commonly found in decentralized finance (DeFi). There are even ambitious plans to launch a Shiba Inu-based metaverse, marking a significant departure from its meme-focused origins. However, despite these innovative advances, questions remain as to whether these efforts are enough to alter the Shiba Inu's trajectory.
Key obstacles remain
One of the most important obstacles hindering the renewal of Shiba Inu is the fundamental role of supply and demand dynamics. Especially in the cryptocurrency market, where speculation is often a key driver of price appreciation, an imbalance between supply and demand can be the nail in the coffin of a cryptocurrency, and Shiba Inu could be sealing its own destination.
While widespread use cases often contribute to increased demand for cryptocurrencies such as bitcoin and EthereumShiba Inu faces a major hurdle: a massive symbolic supply of 589 trillion coins in circulation.
A supply of this size means that demand must be orders of magnitude greater to move the price. In recognition of this obstacle, Shiba Inu developers implemented a burning mechanism in early 2022 to try to reduce supply. But not much has changed. In 2023, 76 billion tokens were withdrawn from circulation. That's just 0.0001% of all SHIB tokens that exist today.
Reaching the $1 mark
You can probably see where this is all going. In light of this imbalance, for SHibaInu to reach $1 would be practically impossible. For this to happen, the token would have to rise by a staggering 9,816,570%. It's true that Shiba Inu has made jumps like this before, but a jump of this size would be much more unlikely. If Shiba Inu reached a price of $1 per token, that would mean that it would not only be the most valuable cryptocurrency, but it would be worth more than the entire world economy. Something tells me that this obscure meme coin doesn't have what it takes to reach that price.
Despite Shiba Inu's commendable foray into DeFi and other ecosystem expansions, its main appeal remains pure speculation, and it seems the broader market is starting to realize this. While the crypto asset class surged over 100% in 2023 as household names like Bitcoin and solarium increased by triple digits, Shiba Inu saw its value increase by a measly 25%. For investors looking for exposure to the cryptocurrency market, there are better options. By all indications, this dog could have seen his last day.
RF Fulton has positions in Bitcoin, Ethereum and Solana. The Motley Fool has positions and recommends Bitcoin, Ethereum and Solana. The Motley Fool has a disclosure policy.
