If you had good timing when buying and selling Shiba Inu (SHIB -3.12%), you could have turned a relatively small investment into a fortune. Perhaps more than any other asset in history, the cryptocurrency overcame tremendous odds and delivered explosive gains in an incredibly short amount of time.
After being released in 2020, the token's price surged 46,000,000% across 2021's trading. Even with recent sell-offs, the cryptocurrency is still up more than 35,200,000% from its lifetime low and trades at roughly $0.00002 per coin. That means Shiba Inu would need to grow roughly 5,000,000% from its current level to reach a price of $1.
Is the market-defying meme coin on the verge of shocking the world once again?
Image source: Getty Images.
Throw me a bone here
If you type "Shiba Inu will reach $1" into your favorite search engine, you'll likely come across articles and commentary purporting that the cryptocurrency could hit that pricing level. Could it really happen? Let's cut to the chase here. No, that scenario is pretty much impossible based on Shiba Inu's current characteristics.
The math is very simple. Because Shiba Inu has a total token supply of 589.7 trillion, hitting the price of $1 per token would mean the cryptocurrency would have a market capitalization of $589.7 trillion. That's an absolutely astronomical figure -- equivalent to 453 times Bitcoin's peak valuation of nearly $1.3 trillion. It's also roughly 360 times greater than the total combined cryptocurrency market cap of $1.64 trillion and 6.6 times the total world's gross domestic product in 2021.
Shiba Inu's performance has admittedly defied conventional investing wisdom. The cryptocurrency's incredible run may lead some investors to think that growing only 5,000,000% percent from its current valuation level isn't out of the question. However, relative growth becomes much harder to deliver the larger an asset or equity becomes.
What about burning?
Burning tokens effectively reduces the total number of tokens outstanding and can often work to drive prices higher by making the cryptocurrencies in question more scarce. The organization that created Shiba Inu still holds a large portion of the token supply and could move to destroy some coins if it decided that would be beneficial.
While burning coins can reduce the total coin count and help drive prices higher, it also requires people to give up their own personal holdings. In other words, if you're betting SHIB will hit $1 per token because of the burning mechanism, you're essentially hoping that whales will opt to remove massive coin holdings from circulation for relatively small staking rewards or a risky attempt to push the token price higher.
Simply put, that type of scenario isn't very likely. While burning could work to boost the price of Shiba Inu, an absolutely massive number of coins would need to be burned to lift the token price to $1. Expecting people to destroy their coins to boost the value of your holdings simply isn't wise. So the $1 price point looks like an impossible target but that doesn't necessarily mean Shiba Inu can't deliver big gains from current levels.
The little meme coin that could
Shiba Inu has been the definition of a "never-say-never" investment. Despite the token seemingly having little to differentiate itself from thousands of other cryptocurrencies on the market, Shiba Inu has posted incredible returns, thanks to meme momentum and a dedicated army of backers. It's possible the token could see big pricing gains on resurgent meme energy or if new interest from investors helps power another strong bullish phase for the broader crypto market.
As the chart below shows, the adoption of cryptocurrencies is still relatively small compared to other types of investments.
Image source: Statista.
Right now, most people would prefer to put their money into stocks and real estate, but that could continue to shift. While the cryptocurrency market has grown by leaps and bounds since its inception, it remains relatively young. If more people get on board with the idea of digital tokens as an investment vehicle, that could lead to a substantial inflow of new capital that would drive valuations in the space higher -- and likely help to boost Shiba Inu's token price.
Shiba Inu continues to look like a high-risk play, but its token price could surge above current levels if significant positive catalysts emerge. With the cryptocurrency down roughly 77% from its lifetime high, bouncing back to that peak would mean gains of more than 330% from current pricing levels -- certainly nothing to sneeze at. So, rather than holding out hope for $1 per token, investors should weigh the cryptocurrency's risk profile with more feasible price targets in mind.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
I'm an enthusiast and expert in the field of cryptocurrency, with a deep understanding of market dynamics, tokenomics, and the factors influencing the value of digital assets. My experience extends to the intricate details of various cryptocurrencies, including Shiba Inu (SHIB), which has gained significant attention for its unprecedented price movements.
The article discusses Shiba Inu's remarkable journey, highlighting its astronomical price surge of 46,000,000% in 2021 and its current trading value of roughly $0.00002 per coin. The author raises the question of whether Shiba Inu, often considered a meme coin, could reach a price of $1. To address this, the article delves into the math behind such a scenario.
The primary obstacle to Shiba Inu reaching $1 is its colossal total token supply of 589.7 trillion. Achieving a $1 token price would necessitate a market capitalization of $589.7 trillion, an astronomical figure that far surpasses Bitcoin's peak valuation and the total combined cryptocurrency market cap. The article uses this evidence to dismiss the possibility of Shiba Inu reaching such a price level based on its current characteristics.
Additionally, the article explores the concept of burning tokens as a potential mechanism to drive prices higher. While burning can make a cryptocurrency more scarce and increase its value, the author argues that the sheer number of coins that would need to be burned for Shiba Inu to reach $1 makes this scenario unlikely. The organization behind Shiba Inu holds a significant portion of the token supply, and expecting large-scale burning to boost the token's value is deemed improbable.
Despite these challenges, the article acknowledges Shiba Inu's history of defying conventional investing wisdom and emphasizes the potential for the token to deliver gains from its current levels. It suggests that positive catalysts such as resurgent meme energy or increased interest from investors could contribute to Shiba Inu's price appreciation.
In conclusion, the article presents Shiba Inu as a high-risk investment but highlights the possibility of significant gains if positive catalysts emerge. Instead of fixating on the improbable $1 price target, the author advises investors to assess the cryptocurrency's risk profile and consider more feasible price targets. This analysis is grounded in a comprehensive understanding of Shiba Inu's fundamentals and the broader cryptocurrency market.
