The Shiba Inu meme coin, also known as “Dogecoin Killer,” was launched in August 2020. It was the first community-supported token created to operate on a decentralized standard.
Even though the coin wasn’t popular initially, it went on to become one of the top ten cryptocurrencies in October 2021! Within a short span of time, Shiba Inu’s market capitalization rose to a whopping $41 billion. That’s indeed impressive for a meme coin!
But this popularity was short-lived, and the coin’s value dropped significantly, which raised concerns about its continuity.
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But is that true? Is the Shiba Inu coin already dead?
Read along to find out!
Why is Shiba Inu Down?You have not selected any currency to display
The mighty meme-coin is trading at approximately 80% of its highest-ever market value. While fundamentals and trends suggested that Shiba Inu would witness a substantial price increase in the short or medium term, this didn’t happen. However, this creates an alarming question:
“Why did the once-biggest community-backed coin face such a downfall”?
Well, there are several reasons why that happened. Let’s go over each of them briefly:
You see, the inflation rate was unprecedentedly high in 2022. As a result, the government had to step in and raise the interest rates to keep inflation at bay. These market actions made investors hesitant to invest in risky assets, especially cryptocurrency.
Another macro-trend that could be a reason for SHIB’s downfall is related to the overall global market. For example, the Ukraine war, the ever-growing energy crisis, and political tensions caused investors to rethink their investment decisions. This growing uncertainty ultimately resulted in the S&P and NASDAQ indexes experiencing a -20% and -30% annual change, respectively.
Since crypto-assets like Shiba Inu are already risky and volatile investments, the adverse macro trends contributed to their double digits decline.
Coin with a Low Utility
Shiba Inu is primarily a meme coin, and many proponents suggested that once its hype is over, its value might eventually reduce to zero. Furthermore, the coin had few use cases and wasn’t adding any value for the investors. So, its low utility factor might be one of the reasons for the price decline.
The Whale Movement
Whale refers to those investors who hold and control a significant chunk (around 5-10%) of a specific cryptocurrency. In 2021, a SHIB whale transferred $2.78 bn worth of SHIB to a different wallet. While the whale didn’t sell the coins, his/her movement practically caused fear amongst investors and led to a decline in market price.
Crash of FTX Exchange
The FTX exchange was once the second-largest cryptocurrency exchange. However, FTX collapsed in 2022, significantly impacting most crypto-assets value, including Shiba Inu.
Shiba Inu Historical Market Performance
Shiba Inu came into existence in August 2020, and it had an initial coin price of $0.00000000051. The currency wasn’t popular initially and experienced fluctuations according to market trends. Fortunately, this all changed after some time!
SHIB had a total supply of one quadrillion. In May 2021, the unknown creator of SHIB, Ryoshi, sent 50% of the token supply to Vitalik Buterin, one of the co-founders of Ethereum. However, Buterin burned 90% of the tokens right away and donated the remaining 10% to India during COVID delta wave.
This action, fortunately, raised the SHIB price by over 1953% to $0.00003532 from $0.00000172. Quite massive, isn’t it?
There are several other market actions that have boosted the SHIB market value. Here are some of the prominent ones:
- The announcement of the Binance listing caused the token to increase by 114%.
- The currency accumulated over $1 billion in total assets within 24 hours after the launch of ShibaSwap DEX.
- The news of SHIB being listed on Coinbase on September 9th, 2021, further strengthened the token’s performance.
- The collaboration with Shopping.io and acceptance of SHIB as a payment mechanism increased the use cases of the digital asset.
- The tweet of Elon Musk in support of Dogecoin brought a massive price surge in the token’s value.
The currency reached an all-time high of $0.000089 on October 28th, 2021, and entered the list of top ten cryptocurrencies. During this time, the currency overtook Dogecoin for a short period, and it also caused many investors to become millionaires overnight.
However, the market has corrected since then. The 2022 bearish season has been awful for the token, and it has lost 70% of its value since its prime time. All of this depicts that Shiba Inu has been a pretty volatile token, and the figure below illustrates its fluctuating performance from the past year.
According to coinmarketcap, SHIB currently trades at $0.00001407 and has a market capitalization of $8.3 billion.
How does Shiba Inu Compare with the Terra (LUNA) Coin?
The fallout of the Terra Classic (LUNA) created a bearish trend in the market last year. It increased the fear amongst Shiba Inu investors since Terra practically plummeted to an all-time low value.
However, it must be noted that there are significant differences between the two cryptocurrencies:
- Terra is a blockchain project, while Shiba Inu is a meme coin.
- Terra was pegged to USD, while Shiba Inu was hosted on the Ethereum blockchain.
As of last year, TerraUSD (UST) was the 4th largest stablecoin. However, the token experienced technical issues, and its destiny changed. Stablecoins are relatively secure and are backed by fiat currency. However, TerraUSD wanted to be different and developed an algorithm to maintain a peg to the US dollar.
This innovative move backfired. What happened was that a group of sellers withdrew more than $2 billion in USTC, and the majority exchanged it for USDC, ultimately causing the token to de-peg from the dollar.
The algorithm had a default rule that investors could exchange UST for $1 worth of LUNA. This created an arbitrage opportunity for investors, and they massively burned LUNA tokens using their USTC. The result? LUNA tokens hyperinflated, and prices fell from trading at $80 to fractions of cents. The fallout wiped around $60 billion and dampened the operations of several crypto companies.
All of this turmoil created fear and confusion among Shiba Inu investors. However, the currencies are unrelated because LUNA had a different purpose than Shiba Inu. While the market value declined for both tokens, there isn’t any correlation between the two cryptocurrencies.
Are There Any Expected Future Projects That Will Spark Trust in Shiba Inu?
The team and community behind the “Dogecoin killer” are keeping the currency alive. Fortunately, the SHIB community has announced several existing and future projects that may revert the token to its former glory. Let’s look over each of them.
Skytoshi Kusama, the lead developer, conveyed the updates and plans of Shiba Eternity — the all-awaited game in the Shiba ecosystem. Kusama describes the game as a fun and exciting venture for SHIB holders. According to him, releasing this game will increase the burning rate of SHIB coins, which might increase the token’s value. Even though it’s tested in Vietnam, the game will go through a final test in Australia.
Even though Shib Verse was launched way back in 2021, the metaverse ecosystem is being innovated with new features now and then. The metaverse has 100,000 plots of virtual land, which can be minted and allows the owners to earn from them. The founders describe Shib verse as an immersive experience enabling users to explore the Shiba universe like never before.
Furthermore, the founder announced the launch of a new token, TREAT, which will be used as a reward token for metaverse and blockchain games.
The developers posted updates about the release of Shibarium — a layer-two blockchain that will run on top of Ethereum. The primary purpose of Shibarium is to remove barriers to small transactions, upgrade speed, and enable the development of De-Fi. All of these new developments suggest that the coin will see an upward trend in the future.
Does Shiba Inu Have a Future Ahead?
There are conflicting views regarding the future of Shiba Inu. Some believe that the SHIB doesn’t have many use cases and is simply a payment mechanism that many institutions and retailers don’t even accept. As a result, investors believe that SHIB will vanish once the crypto-asset hype declines.
On the other hand, the upcoming projects and the token’s dominance on Twitter suggest that its value will increase in the future. Another reason is that there have been increased long-term wallet holdings of SHIB. This reflects that the investors are confident and aren’t willing to sell off their holdings anytime soon.
Skytoshi Kusama also revealed that a new stablecoin, SHI, would be launched sometime later in the year. In addition to this, the token performed better compared to other altcoins. For example, Shiba Inu’s price has declined by 41% in the last 12 months. At the same time, ETH fell 32%, Solana 74%, and Cardano around 65%, suggesting that the crypto-assets are trading at a low value due to the market sentiments.
All of this combined signals that the SHIB token may have a bright future ahead.
Parting Thoughts: Is Shiba Inu Coin Really Dead?
While it seems that the SHIB coin has lost its charm and is probably dead, it’s far from true. Even today, the Twitter presence of Shiba Inu is strong, and the SHIB community supports all the developments undertaken to improve the ecosystem. With new projects in the pipeline, it’s expected that the coin will witness a rise in value and won’t vanish anytime soon.