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Can Shiba Inu Repeat Last Year’s Gain?

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Shiba Inu (CRYPTO:SHIB) stood out from the crowd last year in one particular area, and that’s performance. The young crypto player soared a mind-boggling 45,000,000%. Since then, like many other cryptocurrencies, Shiba Inu has lost momentum. It’s dropped about 42% so far this year.

Now, investors might wonder if Shiba Inu’s declines are just part of a temporary, general market downturn — and if the cryptocurrency has what it takes to burst out of the doldrums and rebound. In fact, some investors might ask themselves whether Shiba Inu could even repeat last year’s gain. After all, catalysts lie ahead. Let’s look at whether this 2021 success story can take the title of 2022 success story, too.

A Shiba Inu dog rests on a bed.

Image source: Getty Images.

Why a market favorite?

So, first of all, why has Shiba Inu been such a market favorite? The price is one big reason. It trades for only a fraction of a cent. That makes it very accessible for a wide range of investors. An investor can purchase thousands of Shiba Inu tokens for less than $1.

The token’s loyal supporters (known as the Shib Army) also play a role in the crypto’s performance. They invest in and use Shiba Inu. And they spread news about it actively across social media platforms.

Finally, the popular meme coin also attracted more and more investors after its massive gains began last year. Some feared missing out on what looked like a major opportunity. And for some short-term investors, Shiba Inu did result in a big win. For most investors, however, the picture hasn’t been so bright. Right now, for example, about 56% of the token’s holders are losing money on their investment, according to Into the Block data.

Two catalysts ahead

Now, let’s look at whether Shiba Inu could repeat last year’s performance. Two catalysts could offer a boost.

First, the cryptocurrency is developing a layer-2 solution called Shibarium. This means Shiba Inu tokens would migrate from their current home on Ethereum to this new blockchain. The goal is to avoid the congestion and high transaction fees associated with Ethereum. Shibarium could launch as early as this year.

The next possible catalyst is Shiba Inu’s entrance into the metaverse. The crypto already said it will begin selling virtual land in its planned metaverse “really soon.” Of course, many players, like The Sandbox, are way ahead in this area. But we’re still in the early days of the metaverse. So there is room for new players. 

Now, we know Shibarium and the metaverse could lift Shiba Inu. But by how much? Is a 45,000,000% gain a possibility?

Let’s look at it from a mathematical perspective. If Shiba Inu reaches the major milestone of $1, it “only” will have climbed about 4,000,000% from today’s level. Considering Shiba Inu’s coin supply of 549 trillion, its market cap would total $549 trillion. That’s more than the entire cryptocurrency market. So that’s unlikely to happen. And an even greater gain — 45,000,000% — seems impossible. All of this means that 2021’s crypto star isn’t likely to claim that title again this year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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