Will Shiba Inu (SHIB 3.68%) go to the moon and make its investors rich once again, for the fifth time in its history? It’s very possible, but that doesn’t mean you should buy it with a sizable investment of $5,000 on the line.
While it isn’t likely to perform with as much volatility or as much excitement as a meme coin, XRP (XRP 1.80%) is a much better place to park your money. In terms of making its investors wealthy, it has a good track record too. Over the long term, it’ll likely get even better. Here’s why.
Look for where and how value is being added
For there to be a strong investment thesis for buying either of these coins, it’s necessary to be able to articulate the mechanism by which they’re going to become more valuable. Most investors are going to find that descriptive process a lot easier with XRP than with Shiba Inu, which is a telltale sign that one investment is better than the other.
For instance, if you believe Shiba Inu is a good investment, your beliefs are probably grounded in the idea that as a meme coin, the potential for it to grow depends on the amount of attention it gets from the public. The more people talking about the coin and its price action, the more people will be willing to buy it and make the price go up — so goes the narrative about how these meme coins tend to work.
Since Shiba Inu in particular has a market cap of nearly $8.9 billion, the odds of it going to zero overnight are very slim. In the eyes of the token’s proponents, that makes it a safer meme coin play than smaller projects, albeit with somewhat less upside.
But is the idea that attention drives higher prices, and that upwardly mobile prices then drive more attention, actually saying anything about what increases the coin’s fundamental value? No, nothing at all. It’s talking only about the short-term pricing of the asset, which, without any fundamentals from which to derive the value, is inherently extremely volatile and fickle. So there isn’t a real thesis for buying the coin here. There’s just a set of thesis-like statements that never quite make a complete argument.
In contrast, the investment thesis for XRP looks sterling. The coin is already widely used by banks, fintechs, and other financial institutions for processing international money transfers. Its market cap of $134.4 billion, with nearly $8 billion in 24-hour volume as of Feb. 6, is derived from companies and institutions buying the coin and using it for its intended purpose, at scale.
Compared to legacy money transfer systems, its fees are only a fraction of a penny instead of dollars, and its transactions settle within seconds instead of hours. The fact that it collects fees at all guarantees that there’s a revenue that the developers can use to fund improvements to the chain, or to seek new users to onboard them via its marketing activities. There’s a very clear path between people holding and using XRP, and XRP’s value rising over time, even if the aggregate level of demand for the coin doesn’t increase.
As an investment, Shiba Inu simply can’t compete.
No need to overthink this decision
Use your $5,000 to invest in XRP instead of Shiba Inu. There’s no contest here.
Perhaps the reason you were thinking of investing in Shiba Inu in the first place is that you believe it has a better chance of making you into a millionaire than XRP does, simply on the basis of the “meme coins can make people rich quick” mythos that’s increasingly popular these days. To counter that idea, look at this chart.
XRP Price data by YCharts.
If you were buying XRP consistently via a dollar-cost averaging strategy starting a few years ago, you’d have a sizable hoard by now. In fact, if you go back even further, that would still be true. Following that same strategy with Shiba Inu could result in decent returns in the future as well, but those returns would be the result of luck more than anything else, which is not something that serious investors ever rely on.
The lesson here is not to wait for the coin’s price to spike before cashing out, though that’s a decent idea if you’re willing to invest the attention to monitor it. The lesson is to invest consistently over a long period of time to capture the benefit of the coin’s ever-increasing value, as we discussed as part of the investing thesis for buying XRP. Master that consistency, and your $5,000 investment should be a lot bigger in the near future.
