SHIB did get a boost of 21% when popular trading platform Robinhood listed the coin for trading on 12 April. But it has been downhill since then. The SHIB/USD price has dropped by more than 40% since the start of the month and has lost 65% since the start of 2022.
For well over a century, the stock market has been a wealth-creating machine. Even though stocks might underperform other investment channels from time to time, the average annual return of equities over the long run leaves bonds, gold, and housing in the dust. But it's an entirely different story if the view is narrowed to just the past couple of years. Whereas the benchmark S&P 500 is up approximately 90% since its March 2020 pandemic low, the aggregate value of all digital currencies has catapulted higher by 791% over the same time frame. Although crypto's blue chips, Bitcoin and Ethereum, have played a big role in this nominal value increase, it's meme coin Shiba Inu (SHIB -1.13%) that's been largely responsible for luring new investors into the cryptocurrency space.
If you're wondering how a relatively obscure crypto token came out of the woodwork to inspire more than 1.1-million coin holders, look no further than its historic return in 2021. According to data from CoinMarketCap.com, investors with the luck, stomach, and wherewithal could have purchased Shiba Inu tokens for $0.000000000073 at the stroke of midnight on Jan. 1, 2021. In less than 10 months, on Oct. 27, these same coins would change hands at an all-time intraday high of $0.00008841. Having eliminated six zeroes after its decimal point, SHIB gained a jaw-dropping 121,000,000%. In other words, a $1 investment would have turned $1.2 million in under 10 months.
Even accounting for a significant pullback in the final two months of 2021, Shiba Inu ended the year higher by roughly 46,000,000%. This may well be the largest single-year gain we have ever witnessed for an asset and it's more than enough of a dangling hook to attract new money and investors.
It also didn't hurt that cryptocurrency market dynamics were working in its favor. Whereas it's relatively easy for skeptics to short-sell a stock or perhaps buy a derivative, such as a put option, there are no derivatives to bet against Shiba Inu. Further, some crypto exchanges don't even allow short selling. This created a natural buy bias that, coupled with social media buzz, helped send Shiba Inu to the moon. A visibly worried investor looking at a rapidly rising then plunging crypto chart on a tablet.
Unfortunately, one of the world's most popular digital currencies is unlikely to enjoy an encore performance in 2022 — or ever again. While many SHIB holders are asking if their prized token can hit $0.01, perhaps the more pressing long-term query is, "Could Shiba Inu eventually fall to $0?" Though it might be difficult to envision Shiba Inu giving back all of its 2021 gains, and then some, over time, there's no shortage of reasons to be skeptical about its future. To begin with, Shiba Inu lacks anything resembling a competitive edge or lasting differentiation. At its core, it's an ERC-20 token built on the Ethereum blockchain. This means SHIB is nothing more than a glorified payment coin. While Bitcoin has seen plenty of success as a payment coin, it's also riding a first-mover advantage. There's nothing special about Shiba Inu's payment use case. In fact, its ties to the Ethereum network have made transactions using SHIB quite costly.
Building on this previous point, Shiba Inu has virtually no use case as a payment token. Online business directory Cryptwerk lists only 659 merchants as accepting SHIB for payment as of June 7, 2022. Worse yet, nearly 20% of these 659 merchants are nothing more than crypto services, such as brokerages and digital wallet services. This means only 533 mostly obscure businesses in a world with over 500 million entrepreneurs are accepting Shiba Inu as payment.
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