|pic credit: the independent|
There must always be imitators when anything becomes famous. As a result, Dogecoin’s moonshot had to be followed by the Shiba Inu cryptocurrency’s rocket ride. Is it, however, practical to own a Shiba Inu? In this post, we shall go deeper into this topic.
Why has the popularity of the Shiba Inu climbed so high?
To say that the Shiba Inu has sparked a lot of interest is an understatement. Shiba Inu has profited from crypto investors’ interest in pet-themed coins, as well as tweets from Tesla CEO Elon Musk showcasing his Shiba Inu-breed dog.
The Shiba Inu’s accessibility is another selling point. Investors may now buy and trade the 10th most valuable cryptocurrency on many well-known cryptocurrency exchanges, including Coinbase Pro. That is without a doubt the case.
Shib’s rapid rise in May helped it get the attention of cryptocurrency exchanges. This increased availability of Shiba Inu for purchase has increased liquidity and strengthened the community. On October 14, Etherscan data indicated that approximately 729,000 addresses were Shiba Inu owners.
The anticipated introduction of the decentralized exchange shibaSwap in July 2021 is the third reason for Shiba Inu’s popularity. This website allows “hodlers” to stake their currency for interest.
Staking is not a new concept, but it may encourage investors to hold their Shiba Inu coins for longer periods of time.
What is the cause of the decline?
It’s vital to first comprehend why Shiba Inu costs have dropped so much. At first glance, the decline looked to be nothing more than normal market volatility. After the steep gain in Bitcoin this year, a modest drop is to be expected.
What began as a regular retreat on Thursday, however, turned into a catastrophe. Shiba Inu dropped more than 20% in intraday trading. You may blame it on a mysterious billionaire.
Last August, an unnamed buyer paid $8,000 for 70 trillion Shiba Inu coins. The coins were valued at almost $6 billion at the peak of the cryptocurrency. This week, though, this newly minted billionaire began transferring a significant portion of those coins — more than 40 trillion – to four different places.
After such a massive return, the temptation to take some profits off the table is unquestionably great. There are worries that a large number of coins may flood the market as a result of the recent transactions by the unknown Shiba Inu billionaire.
If this happens, there will very probably be a greater crash. Consider the following: There are several aspects to consider before acquiring a Shiba Inu, especially in light of the recent Shiba Inu sell-off.
Most importantly, understand that if you purchase, the majority of the value of your investment will be in the hands of someone you don’t know. If the mystery billionaire makes a terrible decision, you might lose a lot of money. However, it isn’t just this one person who has the financial means to cause you damage.
Even if the unidentified billionaire does nothing, the fear of what may happen among other Shiba Inu sellers might lead to widespread selling. Also, have a look at the history of other cryptocurrencies. Several of them, such as Nano and Litecoin, has lost more than 90% of their value since their all-time highs.
Is there anything that prevents Shiba Inu from following in their footsteps?
No, not at all. The truth is that every cryptocurrency is vulnerable to sharp price drops. None of them has intrinsic worth in the same way that stocks do. Shiba Inu – or any other cryptocurrency – is only worth what investors and dealers are prepared to pay at any particular time.
Caveat emptor, Could the Shiba Inu make a comeback and fly to the moon? Perhaps. The digital coin fell much worse in May than it had previously. However, in October, it launched a turnaround that recouped all of the losses and then some.
The Shiba Inu has made a significant recovery after Friday’s sell-off last week. If you don’t buy now, you might lose a lot of money. Naturally, if you buy, you risk losing a lot of money. Investing in cryptocurrencies is not for the faint of heart.
You may bold, highlight, and emphasize that argument for cryptocurrency with minimal real-world application, such as Shiba Inu. Whether or not to buy Shiba Inu on their own is a decision that investors must make.
However, you should be aware of an ancient Latin phrase: caveat emptor. “Buyer beware” is how it’s translated. Because of the unknowns surrounding Shiba Inu, any potential buyer should be mindful of the increased risk.
The Shiba Inu’s fairytale run might come to an end. Despite these factors, Shiba Inu’s bubble might burst at any time. While digital currencies are notoriously volatile, the Shiba Inu may lose the majority of its value in the next months for three reasons.
It isn’t practical in the actual world. The lack of real-world utility is likely the most serious criticism leveled against the crypto markets’ most valuable asset. Even the most well-known digital currencies, to be honest, have limited use outside of the bitcoin market.
Dogecoin, for example, is accepted by over 1,700 businesses worldwide, including AMC Entertainment, the world’s largest movie theatre chain. However, it took Dogecoin eight years to get this level of acceptance, which is tiny given that the United States has over 32 million businesses and the world has over 500 million entrepreneurs.
In comparison to Shiba Inu, Dogecoin appears to be a widely acknowledged digital cryptocurrency. After a little more than a year of operation, online business directory Cryptwerk reports that just 88, primarily obscure, businesses accept shib as payment.
This is such a small amount that it’s reasonable to conclude Shiba Inu has no practical application outside of a cryptocurrency exchange. The average holding period is less than a week Another reason to be wary of Shiba Inu is the average holding duration of six days, according to Coinbase statistics.
Given the cryptocurrency market’s volatility, it’s no surprise that traders are aggressively seeking to dive in and out of positions for a quick profit.
A six-day holding period, on the other hand, implies that there is nothing really fundamental or sustainable driving these gains for a digital token that has increased more than 5,100,000 percent since August 1, 2020. Rather, it appears that shib’s actions are primarily motivated by emotions and tweets (looking at you, Elon).
The problem with emotions in the investment world is that they can change at any time. If Shiba Inu can’t maintain the momentum that has allowed it to rapidly build its community, boredom, as evidenced by its short average holding period, might quickly undo its remarkable advantages. Short-term gains that are out of this world haven’t held up in the past.
Finally, history has demonstrated that large increases in a single year do not last over time. With 3,700 percent gains in 2020, Bit Digital, a cryptocurrency mining company, was the best-performing stock.
Bit Digital is a mining company that specializes in Bitcoin, the most valuable digital currency by market value. The company’s shares exploded as Bitcoin’s value soared in the second half of the year.
Bit Digital shares, on the other hand, are down 51% in 2021, a major improvement from the company’s mid-July low of nearly 81 percent.
The same may be said about Bitcoin. Despite the fact that the largest cryptocurrency by market capitalization has seen considerable growth in value over the last decade, it has also had three pullbacks of at least 80%.
Highfliers may fall into obscurity in the digital currency sector, which is based on intangible components like emotions and technical analysis. Based on history, the Shiba Inu appears to be on the approach of a massive correction.
Do you think you should get a Shiba Inu right now?
It’s vital to understand the investment’s core fundamentals before you invest anywhere. Just because the price of a stock or cryptocurrency has risen dramatically doesn’t mean it’s a good investment, and in many cases, a rapid price increase is a red indicator.
The price of the Shiba Inu has risen, thanks to ordinary buyers accumulating tokens as a short-term investment. These investors usually build a cult around a certain stock or cryptocurrency, invest heavily to dramatically increase the price, and then sell once the price has peaked.
Because the prices of these assets do not always correlate to the underlying facts, they can be exceedingly risky. Right now, the Shiba Inu has very limited real-world application, and its price is rising primarily due to its fan base.
If those enthusiasts decide to sell their tokens and go on to another investment, Shiba Inu will lose nearly all of its value. That isn’t to say it’s impossible to invest in a Shiba Inu, but it is challenging.
Unless it gains real-world application and a strong competitive edge in the crypto business, there’s a good chance it’ll crash and burn. If you don’t sell at the right time, you could lose a lot of money.
Disclaimer: Nothing in this post should be construed as a recommendation to buy cryptocurrencies or invest in any way. This is only an amateur’s viewpoint, not that of a professional financial advisor. Before investing in cryptocurrencies, I recommend discussing with your financial advisor and performing your own study.