Up 49,000,000% in 2021: Is Shiba Inu still a buy?

Llast year, the very followed S&P 500 has more than doubled its average annual total return over the past 40 years and hit nearly six dozen closing records. And yet, the stock market has remained in the background to the outperformance of crypto-currencies.

As of the very early morning hours of December 29, the aggregate value of all cryptocurrencies was $ 2.26 trillion. In one year, the crypto market has almost tripled in value. Although the usual suspects, Bitcoin and Ethereum, were responsible for much of that increase – they account for about 60% of the value of $ 2.26 trillion – one coin stood head and shoulders above all the others: Shiba inu (CRYPTO: SHIB).

The Shiba Inu-themed plays brought some life-changing gains in 2021. Image source: Getty Images.

Shiba Inu’s 2021 was historic

While the cryptocurrency space has already generated breathtaking short-term gains, we’ve never seen anything like the coin that Shiba Inu produced in 2021.

According to CoinMarketCap.com, investors were given the option to buy SHIB for $ 0.0000000073 per token at midnight on January 1, 2021. Over the next 12 months, SHIB ate six zeros and was getting closer to $ 0.000036, as of December 29. All in all, we are talking about a gain over a single year of about 49,000,000%!

To put it in perspective, if someone bought $ 2.05 from SHIB at midnight on January 1, 2021, and we assume there were no transaction fees, they would be a millionaire at their current price per token. In comparison, it’s exceptionally rare to see annual gains above 10,000% in the stock market, and just as rare as cryptocurrencies offer seven-digit annual returns. I remember the privacy room Edge pulled off this feat in 2017 (a gain of nearly 1,200,000%), but hasn’t seen any major coins come close since.

How, exactly, does an asset appreciate 49,000,000% in one year? Let’s take a closer look.

Two divergent maps leading to a digital rocket ready for launch.

Image source: Getty Images.

Dissect the moonstroke at 49,000,000% SHIB

The most obvious reason Shiba Inu proved unstoppable for most of 2021 was its increased visibility. As the SHIB rose through the ranks in popularity and market capitalization, more and more crypto exchanges welcomed it for listing. Having more exchanges to trade SHIB has meant improved liquidity and a large holder base. According to Etherscan, Shiba Inu has 1.1 million individual holders.

The launch of the decentralized exchange ShibaSwap in July was also a key catalyst. In addition to also improving the liquidity of a previously illiquid token, ShibaSwap offers SHIB holders the opportunity to wager their coins and earn passive income. The point is, ShibaSwap has encouraged investors to hold onto their SHIB for a considerably longer period of time.

Enthusiasts are also excited about real-world adoption examples of SHIB. Cinema channel AMC Entertainment plans to roll out the Shiba Inu coin as an accepted form of online payment in the first quarter, while the tech-focused online retailer Egg trade gave the green light to SHIB in December.

To add at this point, there is enthusiasm surrounding the Shibarium Layer 2 blockchain project planned to launch in 2022, as well as the ongoing development of games based on non-fungible tokens (NFTs).

Additionally, no story about Shiba Inu’s success would be complete without hinting at Fear of Missing Out (FOMO). After watching Bitcoin skyrocket to 8,000,000,000% in 11 years, crypto investors aren’t afraid that digital currencies are hitting an unforeseen ceiling. These inelastic buying habits were essential in removing six zeros from its token price.

Silver dice indicating buy and sell are thrown on a digital screen displaying cryptographic charts.

Image source: Getty Images.

The $ 64,000 question: Is Shiba Inu still a buy?

But the most relevant question after gaining 49,000,000% in one year has to be: Is Shiba Inu still worth buying? The answer, quite clearly, is no.

While patient investors have been rewarded with life-changing earnings, there are three very good reasons why Shiba Inu should be actively avoided in 2022 (and beyond).

the most important reason investors must keep their distance is the lack of competitive advantages and differentiation of Shiba Inu.

According to CoinMarketCap.com, over 16,100 digital currencies are now listed, with hundreds of new coins debuting every week. Standing out in the crypto space is getting more and more difficult. Shiba Inu is currently nothing more than an ERC-20 token built on the Ethereum blockchain. It is subject to the same transaction lag and high fees that continually plague the popular Ethereum network. In other words, other payment coin projects continually outperform Shiba Inu and provide little reason for merchants to accept SHIB as a payment method.

This leads to the second reason to avoid Shiba Inu in 2022: a lack of utility in the real world. In a sense, you could say that the utility of SHIB has skyrocketed last year; but that would be normal when only a few dozen merchants willingly accept your coin. The Cryptwerk online business directory shows that only 395 merchants worldwide accept SHIB as a method of payment. Additionally, 44 of those 395 traders are nothing more than cryptocurrency exchanges. This means that 350 of the most obscure online businesses in a world of over 500 million entrepreneurs accept SHIB as a form of payment. That’s a fraction of a fraction, and certainly not a $ 20 billion market value.

History provides the third reason why Shiba Inu is such a terrible investment in 2022. Virtually all of the payout coins that gained 24,000% or more in a short period of time lost between 93% and 99% in the 12 to 26 years. months after their peak. Shiba Inu has already fallen 60% from its intra-day October 27 high, and history suggests so still has a lot to fall for after gaining 49,000,000% in just 12 months.

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* Returns of the portfolio advisor as of December 16, 2021

Sean williams has no position in any of the stocks mentioned. The Motley Fool owns and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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