Shiba Inu is the 14th most valuable cryptocurrency, with a market capitalization of nearly $15 billion. This performance is truly impressive in itself, but the story becomes the stuff of legend when you dig a little deeper. Since hitting a low in November 2020, the price of the SHIB token has skyrocketed by 60,000,000%, meaning that just $17 invested in Shiba Inu last year would be worth $10 million today.
Although very few assets have ever generated so much wealth in so little time, after Shiba Inu fell 60% from its peak, many investors are still hoping history will repeat itself. In fact, some Shiba supporters are forecasting a high of $1 by 2025. This would represent a 2,965,500% increase from the current price of $0.00003342, translating into an annual return of 1,212% over the next four years.
Could Shiba Inu reach a value of $1? Let’s examine a few factors.
What makes Shiba Inu valuable?
In August 2020, someone known by the pseudonym Ryoshi created Shiba Inu, adopting the mascot popularized by Dogecoin. As a result, Shiba Inu earned a reputation as the “Dogecoin killer.”
Shiba Inu is an ERC-20 token, a type of smart contract built on the Ethereum blockchain. In theory, this makes it more functional than Dogecoin, since the token is compatible with Ethereum’s thriving ecosystem of decentralized finance (DeFi) applications.
However, this compatibility has not actually translated into utility. Shiba Inu has not been integrated into popular DeFi protocols such as Aave or Compound, nor is it a widely accepted form of payment. In fact, there are very few things you can do with the token, and Shiba Inu’s rising price can be attributed to aggressive social media marketing and a brilliant branding campaign.
In other words, with Dogecoin’s rise still fresh in cryptocurrency investors’ minds, a name like “Shiba Inu” attracted attention and sparked the curiosity of the most enthusiastic supporters of meme cryptocurrencies. After that, the hype generated on social media platforms took care of the rest.
Is $1 for the SHIB token a realistic price target?
A cryptocurrency’s popularity is never a good long-term investment thesis, at least not without something more substantial to support it. But in the short term, Shiba Inu is a perfect example of how powerful popularity can be. That is why some investors are still hoping SHIB will accomplish what Dogecoin never managed to do: break the $1 mark.
Unfortunately, this is impossible. At a price of $1, Shiba Inu’s market capitalization would have to reach $550 trillion. For context, global gross domestic product—the value of all goods and services produced across every economy—is expected to reach $116 trillion by 2025. If Shiba Inu actually reached $1, that would mean a market capitalization several times larger than the combined output of every economy in the world. For this reason, investors should avoid this cryptocurrency.
Source: Fool.com