In 2021, Shiba Inu (SHIB 1.11%) was without a doubt the single greatest investment, skyrocketing 117,000,000% between the start of the year to its all-time high in October of that year. The speculators who were bold and lucky enough to ride this wave and sell at the right time certainly made a ton of money.
But things haven’t been so rosy since then. As of this writing, the dog-inspired cryptocurrency is down about 91% from its peak price. Investor enthusiasm for digital assets has waned, even though the overall market has done well in 2023.
So what’s next for this meme token? Is Shiba Inu more likely to see its value go to zero, or to $0.01? Let’s look at valid arguments for both of these outcomes.
The case for zero
Shiba Inu is currently the 16th-most-valuable cryptocurrency, with a market cap of $4.7 billion. Although it was launched in 2020, indicative of just how young this project is, it’s hard to argue with how rapidly the token has become a top digital asset. This reality might make it hard to believe that Shiba Inu could eventually become worthless.
The network rode the booming market environment of 2020 and 2021, an era of loose monetary policy and massive government stimulus to strengthen the economy during the worst of the coronavirus pandemic. Moreover, Shiba Inu benefited from meme-stock mania in the spring of 2021, when fundamentally unsound companies saw their share prices catapult to new heights. People were looking to place bets on the most speculative assets, and Shiba Inu gained from this trend.
Being mentioned by tech mogul Elon Musk doesn’t hurt either. This speaks to how much Shiba Inu’s value is derived from the community, as opposed to any real-world adoption of its network. If more crypto enthusiasts simply lose interest and start focusing on another speculative digital asset that pops up, then Shiba Inu could quickly see its price crater.
More broadly, if cryptocurrencies and blockchain technology just don’t take off like many believers hope, then it’s easy to see how this meme token could completely cease to exist. The downside risk is certainly notable.
The case for $0.01
To hit $0.01 per token, Shiba Inu’s price would need to rise 124,000% from where it currently stands. The token’s peak price was $0.00008845, reached in Oct. 2021. There are some catalysts that could make it a reality.
The upcoming Shibarium update, launched on Aug. 16, is a layer-2 scaling solution meant to speed up transactions and lower fees. If it becomes a successful implementation, then developers and users could flock to the network, raising demand for the token and pushing up its price. This could be a stepping stone to Shiba Inu eventually introducing even more major updates, which could bring about more use cases, like decentralized finance, non-fungible tokens, and the metaverse, which could grow the network’s utility and value.
There are 589 trillion Shiba Inu tokens in circulation right now, but there’s a plan in place to burn coins at a rate of 33 billion per year. Some bulls think the network can burn 5 trillion per month. That could lead to a much smaller supply of tokens. Add in the hope of rising demand, and Shiba Inu’s price could soar.
Another catalyst, albeit probably a more unlikely one, is if the global economy starts to see hyperinflation in the decade ahead. With more fiat currency chasing a decreasing number of Shiba Inu tokens, the latter’s nominal value could easily skyrocket in no time. But the world would have more pressing issues to deal with.
The likely scenario
There’s no doubt in my mind that over time Shiba Inu likely goes to zero before it hits a penny. By reaching a price of $0.01 per token, barring hyperinflation and the possibility of the aggressive burning of coins, Shiba Inu’s total market cap would approach the neighborhood of $6 trillion. That’s an astronomical figure that’s hard to wrap one’s head around.
That figure would make Shiba Inu worth more than the likes of Apple and Microsoft, two of the most dominant businesses of all time, combined. Based on the current state of the blockchain network, Shiba Inu certainly doesn’t provide much utility to warrant that big of a valuation. This sounds like a pipe dream to me.
Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Microsoft. The Motley Fool has a disclosure policy.