KEY POINTS: SHIBA INU

  • Last year, the cryptocurrency produced astronomical gains.
  • Shiba Inu’s price would have to continue soaring to reach a $1 target.
  • Buying SHIB could be more like gambling than investing.

More than a few naysayers were proved wrong by the Shiba Inu (CCC:SHIB-USD) token. The meme cryptocurrency’s price skyrocketed 49 million% in 2021, exceeding any expectations. But could SHIB, that’s value is $0.00002193, make similar gains in 2022 and reach $1?

Not likely

Its market cap will need to rise by roughly another 4,000,000% above its current level to achieve this target. That’s an ambition that it would have difficulty reaching, no matter how universally recognized a meme currency it is.

READ: WHY DID SHIBA INU DROP?

Why Shiba Inu won’t likely hit $1

One of the reasons some people believe SHIB may reach $1 is that it is becoming increasingly popular as a payment method.

Indeed, electronics vendor Newegg (NASDAQ:NEGG) and electric vehicle manufacturer Tesla (NASDAQ:TSLA) already accept the coin. In addition, GameStop(NYSE:GME) and AMC Entertainment (NYSE:AMC) also take SHIB.

Bitcoin competition

Shiba Inu isn’t the only crypto accepted as payment. More importantly, many additional merchants now accept Bitcoin (CCC:BTC-USD), and it is far more popular among customers than Shiba Inu.

That suggests that Shiba Inu, unlike Bitcoin or other prominent cryptocurrencies, will have difficulty taking the lead as a preferred payment method in the crypto world. And without any actual use, it’s hard for any cryptocurrency to keep rising in value.

Previous growth spike

On the other hand, Crypto optimists argue that SHIB will reach $1 soon because the coin has already exploded in value in a short amount of time. When you look at Shiba Inu’s increasing price last year, it might seem like the crypto can repeat those same results.

But let’s consider this scenario: There are now about 550 trillion Shiba Inu coins in circulation. So if the coin reaches $1, that will imply a jaw-dropping $550 trillion valuation.

A little perspective

To put that in perspective, all cryptocurrencies combined hit a high of $3 trillion in value back in November before plummeting to around $1.8 trillion lately. Or, to look at it another way, it would be many times greater than the world gross domestic product of $85 trillion in 2020.

To reach $1,000, Shiba Inu’s value must be more than 300 times greater than the cryptocurrency market right now (or more than six times greater than global GDP.)

Unfortunately, for various reasons, it is unlikely that this will happen.

Another way to think of cryptos

It may be tempting for investors to examine SHIB and other cryptocurrencies, thinking to themselves, “If it could just reach X price….” But, the proper approach to cryptocurrency investing is to figure out the value of a coin and its blockchain before putting money into it.

What crypto to choose

You may come to realize, for example, that Bitcoin has value other than as a vehicle for speculation. Alternatively, Ethereum (CCC:ETH-USD), with its widely adopted blockchain technology, is an excellent investment as the network of choice for decentralized finance apps.

Even if you’re a novice, it’s essential to examine cryptocurrencies that could go up because they’re actually useful. Expecting people to be interested in Shiba Inu, or any other investment, without considering its use is speculation.

READ: WHY DID THESE 3 CRYPTOCURRENCIES PLUNGE?

Future outlook

All in all, Shiba Inu isn’t a compelling investment for most people. We shouldn’t lose hope, though; there are great crypto investments out there for investors doing more than just gambling with their money.

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