Should You Buy Shiba Inu While It’s Trading Below $0.0001?

In the 12 months between 1 January 2021 and 31 December 2021, Shiba Inu (SHIB 0.15%) it delivered a 45,278,000% return, which could have turned a perfectly timed investment of just $3 into more than $1 million. This prevents the return of almost all actions in history – inclusive Nvidiawhich is up 476,000% since its initial public offering (IPO) in 1999.

That momentum evaporated. Shiba Inu is currently trading at $0.000013, which is 85% below its all-time high of $0.000086. Like most cryptocurrencies, it has failed to gain much adoption as a payment mechanism, so it has almost no utility.

The fate of the Shiba Inu is often determined by speculators, which makes its trajectory difficult to predict. On the other hand, there is no telling when (or if) the token will embark on another historic bull run like it did in 2021. Should investors buy it while it is trading below 0.0001 USD?

The Shiba Inu faces a critical hurdle — adoption

Cryptocurrency enthusiasts have often presented cryptocurrency as a viable replacement for traditional money because it is decentralized and cannot be controlled by any individual or government. However, consumers and businesses seem unconvinced. Even the industry leader Bitcoin it failed to gain traction as a currency. Only 9,524 merchants worldwide accept it as payment for goods and services.

Shiba Inu fared even worse, with only 981 merchants in its ecosystem right now. If consumers can’t spend their tokens in their favorite stores, they have no incentive to own them, and it’s very difficult to create value without this organic demand.

Developers have tried to create new use cases to encourage adoption of the Shiba Inu symbol, but none seem to stick. They’re working on a 2022 metaverse where users can spend tokens to add custom logos, photos, and even names to their virtual plots of land, but it hasn’t officially launched yet and there’s no firm release date.

Developers last year introduced a Layer-2 blockchain solution called Shibarium, which removes some of the inefficiencies associated with legacy. Ethereum the web on which the Shiba Inu was built. It’s now cheaper and faster to trade the Shiba Inu token, but it doesn’t seem to have boosted its adoption or price.

A Layer-3 blockchain solution could also be on the way, which will increase privacy and offer customizations to facilitate a higher volume of transactions. But that simply puts the cart even further before the horse — without widespread adoption, a more efficient network isn’t useful or even necessary.

Image source: Getty Images.

Substantial supply of Shiba Inu could further limit growth

Even if the Shiba Inu solves the adoption problem, the enormous supply of tokens could further limit the advantage. There are 589.3 trillion tokens in circulation, so even at the tiny price of $0.000013, Shiba Inu has a market cap of $8.1 billion. Simple math dictates that if the price were to rise to $1 per token, Shiba Inu’s market cap would reach $589.3 trillion.

This would make the meme token 21 times more valuable than the entire US economy, which generates about $28 trillion in gross domestic product (GDP) each year. In other words, it’s unlikely we’ll ever see Shiba Inu trading at $1 per token.

However, it could reach a price of $0.0001. It would require a 670% gain from here and take Shiba Inu’s market cap to $58.9 billion, which is a little less stratospheric. The move should be driven entirely by speculation unless the developers somehow conjure up a way to drive adoption. But it would only represent a small gain beyond Shiba Inu’s previous all-time high of $0.000086, so it wouldn’t be completely uncharted territory.

It’s impossible to predict the fever of speculation, so I wouldn’t buy the Shiba Inu now, even if there is a small, small chance of another historic race in the future. There are so many high-quality stocks that investors could buy instead with much more predictable returns.