Why is Shiba Inu Up 200% in the Past Week?
In the past few weeks, the cryptocurrency market has been rebounding and Bitcoin has hit a 3-month high of $55,000. However, this increase is miniscule compared to Shiba Inu, which has increased over 4500% in the past three months.
Shiba Inu was created by an anonymous founder and released as an Ethereum token in August 2020. It has a total supply of 1 quadrillion tokens, which is why the price per SHIB is so low. The token was created to be a “Doge Killer” and is aiming at replacing Dogecoin as the people’s memecoin.
As a memecoin, the SHIB token has very little real world value and the majority of its price movement comes from retail investors speculating on the hype of the token. For example, back in May 2021, hype for SHIB on popular social media apps like TikTok propelled the SHIB token to a market capitalization of nearly $14 billion, which was entirely based on demand for the useless coin.
After this unprecedented price increase of nearly 12000x from its launch, SHIB cooled off considerably and lost over 75% of its value. For most investors, this signaled the end of Shiba Inu, as the hype died down and retail investors moved on to other projects.
However, the Shiba developers and community did not accept this as their fate. Instead, they began creating ShibaSwap, a decentralized exchange that used the SHIB token as the primary token. They also created the LEASH token, which is given as a reward to those who provide liquidity on the exchange. Finally, they created the BONE token, which is the governance token and allows for users to vote on the Doggy DAO.
Though this may seem like an impressive feat, the reality is that there are already dozens of decentralized exchanges on Ethereum, and ShibaSwap offers nothing unique that would make people want to use it over others like SushiSwap or Uniswap. This is why the ShibaSwap exchange only has around $30 million in daily volume, compared to Uniswap’s $1.2 billion.
If Shiba Inu has no real value, and their decentralized exchange is a failure, then why is the coin increasing so heavily over the past few months? There are three main reasons, all of which are purely speculative and do not indicate any potential for future price appreciation.
First, an anonymous Ethereum whale bought 6 trillion SHIB, worth about $43 million at the time of the purchase, on September 30th. This brought lots of attention to the coin, as retail investors saw whales buying as a sign that they should as well.
Second, Coinbase listed SHIB in mid-September, bringing it to the hundreds of millions of Coinbase users who may not have had access to the coin before. This is by no means an indication that Coinbase has faith in the token, as they have recently been listing every coin possible that they do not think will get them into regulatory trouble. Considering that SHIB is a high-volume coin that is highly speculative, they are able to make lots of money off trading fees, thus giving them a large incentive to list and promote the coin.
Finally, there are rumors that Robinhood, one of the biggest brokerages with Millenials and Gen Z, is going to list SHIB. Some of the initial Dogecoin hype came from Robinhood’s listing, and some investors believe that Shiba Inu will repeat Dogecoin’s performance if and when it gets listed on the stock trading platform.
Even though Shiba Inu is up significantly over the past few months, it is not an indication that it is a sound investment. At the end of the day, all of the announcements and news relating to the SHIB coin are based purely on speculation and hype, as opposed to real world use cases. It is likely that once this initial wave of excitement dies down, SHIB will fall back to its previous lows, and investors will find interest in another memecoin that is rapidly rising.
By Lincoln Murr