Meme coin Shiba Inu (CRYPTO:SHIB) is one of the most popular cryptocurrencies in the world, and for good reason. The price of the SHIB token rose by a monumental 46,000,000% in 2021. If you’d invested $5 in Shiba Inu at the start of 2021, it would be worth over $1.3 million by the end of the year.
Right now, the price of one SHIB token is US$0.00002568, valuing the 14th-largest cryptocurrency at a market cap of US$14 billion. From current levels, SHIB has to gain 37,000% to touch US$0.1, and it will have to gain 3.7 million percent to touch US$1. These gains will be astronomical and will make the SHIB token the most precious asset in the world. If Shiba Inu is priced at US$1, it would command a market cap of around US$550 trillion, which is five times more than global GDP numbers.
While it’s unlikely for Shiba Inu to reach US$1, let’s see if this meme token should be part of your cryptocurrency portfolio right now.
Shiba Inu should have real-world utility Unlike stocks, it’s quite difficult to value cryptocurrencies. Right now, analysts are evaluating the utility of various blockchain networks, which will allow cryptocurrencies to expand their ecosystem and drive demand for the underlying tokens higher.
Most of the world’s largest cryptocurrencies enjoy certain advantages. For example, Bitcoin is viewed as a store of value and a hedge against inflation. The total number of Bitcoin in circulation is limited to 21 million tokens, making it anti-inflationary in nature. As thousands of merchants accept BTC tokens as payment, it’s also a medium of exchange.
Alternatively, the blockchain networks of Solana, Ethereum, and Cardano are used for the development of smart contracts. These contracts are executed using digital tokens, such as ETH, SOL, and ADA, driving prices higher. However, Shiba Inu has gained momentum on the back of Elon Musk’s tweets and a strong community. These trends are not sustainable over the long term.
However, last December a payment platform called Flexa added the SHIB token to its ecosystem. Flexa’s platform is accepted at 40,000 merchant outlets, such as Lowe’s and GameStop (NYSE:GME). Several other companies aim to attract Shiba Inu owners to their brand. Recently, Cineworld provided ticket holders a 20% discount if the transaction was executed with SHIB. Movie-chain heavyweight, AMC Entertainment also asked shareholders if it should accept Shiba Inu as a payment option, and the idea was met with optimism.
Should you buy the SHIB token? Shiba Inu prices soared at a rapid pace due to its social media buzz, confirmation bias, increased visibility, and a large community. But now, investors will look at features such as project development and the launch of the layer-2 blockchain project called Shibarium.
Shina Inu is an ERC-20 token, which means it’s built on the Ethereum blockchain. So, it is impacted by high transaction fees and slow processing time associated with Ethereum. Shibarium is basically designed to enhance the Shiba Inu network and lower fees. A successful transition could lead to the development of NFT (non-fungible token) gaming as well as expansion into the metaverse.
With 17,000 cryptocurrencies available right now, investors should consider the ability of the blockchain network to increase real-world utility over time.
The post Here’s Why it’s Impossible for Shiba Inu to Touch $1 appeared first on The Motley Fool Canada.
Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool owns and recommends Bitcoin and Ethereum.