Shiba

Over the past several years, cryptocurrency has captured the imagination of investors looking for alternative ways to diversify beyond traditional stocks and bonds. Among the vast array of tokens, Bitcoin and Ethereum have emerged as two of the most mainstream options.

Yet, as with any asset class, some investors seek out opportunities that are more disruptive — though often far riskier, too. In the cryptocurrency realm, Shiba Inu (SHIB -0.20%) exemplifies this dynamic: a token surrounded by immense fanfare but still waiting to deliver the kind of multibagger gains its community hopes for.

With its price still trading at less than a penny, some might see now as a rare chance to get in early on a potentially explosive crypto token before it goes to the moon. Even a move to just $1 could generate life-changing returns. But price is not value, and those dreaming of that $1 level should be asking: Is such a milestone realistic, or merely rooted in fantasy?

Let’s break down some numbers.

Image source: Getty Images.

What is Shiba Inu?

Shiba Inu was originally created as an altcoin inspired by Dogecoin.

Built on Ethereum’s blockchain, Shiba Inu integrates with decentralized finance (DeFi) applications and smart contracts. Over time, its dedicated developer community has sought to push the token beyond its meme coin origins by adding real utility. Today, the Shiba Inu ecosystem includes ShibaSwap, a decentralized exchange (DEX) that allows users to trade, stake, and earn rewards, along with engaging in other projects tied to gaming and the metaverse.

Still, despite these efforts, Shiba Inu’s value remains heavily rooted in speculation, with prices often moving in tandem with swings in internet culture or hype-driven narratives.

Shiba Inu is a deflationary coin

In cryptocurrency, tokens can be inflationary or deflationary. An inflationary token sees its supply expand over time, while deflationary tokens have mechanisms in place to reduce the number in circulation. Shiba Inu falls into the latter category. Through its burning process, tokens are intentionally sent to inaccessible wallets — permanently removing them from the circulating supply.

In theory, this shrinking supply creates upward pressure on price since the underlying principles of supply and demand suggest that a scarcer asset should become more valuable.

Can Shiba Inu reach $1?

Let’s break down the math behind Shiba Inu reaching $1. Its price right now is $0.00001213, far from a dollar; far from a penny.

At launch, the token carried a staggering total supply of 1 quadrillion tokens. Today, despite years of burns, its circulating supply remains around 589 trillion tokens. If each token were worth $1, Shiba Inu’s market capitalization would approach $600 trillion — more than five times the value of global gross domestic product.

World GDP data by YCharts

This makes the idea of a $1 target mathematically out of reach under current conditions. The only remotely conceivable path would involve burning massive amounts of the token’s supply. But here’s the catch: Even after hundreds of trillions of tokens have already been burned, Shiba Inu continues to trade at mere fractions of a cent.

For the token to climb meaningfully higher, it would require either an unprecedented surge of global adoption or a highly coordinated, large-scale burn effort sustained over many years. Both of these scenarios border on implausible.

While it is technically possible for Shiba Inu to reach $1, the economics outlined above make it virtually impossible in practice. The sheer scale of supply, coupled with its dependence on speculation and internet-driven hype rather than durable utility, means Shiba Inu offers little in the way of fundamental value at the moment.

For investors, this positions Shiba Inu less as a prudent and credible long-term holding and more as a speculative gamble akin to a lottery ticket.

Since late afternoon Friday, the price of Shiba Inu (SHIB -3.47%) traded close to 7% lower, as of 11:53 a.m. ET today. There is no obvious reason behind the move, but the token is likely struggling along with the broader crypto market.

Crypto is always unpredictable

Coming off a dovish speech from Federal Reserve Chair Jerome Powell on Friday in Jackson Hole, many would have expected cryptocurrencies to be surging right now because the sector has historically benefited from lower interest rates.

Image source: Getty Images.

However, a Bitcoin whale over the weekend sold 24,000 Bitcoin, according to media outlets, triggering a “flash crash” that appears to be impacting the sector right now.

Whales are crypto investors that hold a large amount of any one token. A flash crash is an event that forces an asset price to fall very quickly. These are usually followed by recoveries, but can also trigger forced liquidations. Viewed as a bellwether for crypto, Bitcoin’s daily moves up and down tend to influence the entire sector.

What to make of Shiba Inu

Launched as a meme token in 2020, Shiba Inu has largely been viewed as a viral sensation, opposed to offering any real-world utility. The token launched as an ERC-20 token, meaning it was built on Ethereum’s network.

In recent years, the developers have added more depth to Shiba Inu, particularly through Shibarium, a Layer-2 blockchain solution that processes transactions off chain, and incorporates a burning mechanism, which will help decrease Shiba Inu’s massive supply.

While that’s certainly progress, I still find the token to be too speculative and lacking in real-world utility compared to peers. I would avoid Shiba Inu, or only invest a small amount that you don’t mind losing.

Shiba Inu (SHIB -4.30%) is often regarded as a meme coin rather than a reliable blue-chip cryptocurrency like Bitcoin (BTC -2.05%) or Ether (ETH -3.82%). It was created as a parody of Dogecoin (CRYPTO: DOGE), which itself was a parody of Bitcoin.

However, a $100 investment in Shiba Inu at its earliest trading price in November 2020 would be worth a whopping $2.35 million today. That millionaire-making rally was driven by its early association with Dogecoin, its listings on Coinbase and Binance, Elon Musk’s tweets about Shiba Inu dogs, and the broader buying frenzy in meme coins.

Image source: Getty Images.

That rally boosted Shiba Inu’s market cap to $7.3 billion, but it’s still tiny compared to Dogecoin, which is worth $32.6 billion. Shiba Inu’s price has also declined more than 40% year to date as elevated interest rates chilled the meme coin market, its network activity declined, and its “whales” (big investors) made fewer purchases.

That pullback could drive Shiba Inu’s investors to take some profits and buy more stable cryptocurrencies like Bitcoin, which has risen nearly 20% year to date. That would be a prudent move, but I think Shiba Inu might still be worth buying before 2026 for four simple reasons.

1. Shibarium’s expansion

Shiba Inu is a token that was minted on Ethereum’s blockchain. Ethereum is a proof of stake (PoS) blockchain that supports smart contracts — which can be used to develop decentralized apps (dApps), non-fungible tokens (NFTs), and other crypto assets. PoS blockchains also enable tokens to be “staked” (or locked up for interest-like rewards).

Since Shiba Inu was minted on Ethereum, it doesn’t have its own native Layer 1 (L1) blockchain. But in 2023, its developers launched Shibarium, a Layer 2 (L2) blockchain that offers lower gas fees and faster transactions than Ethereum’s L1 blockchain. It accomplishes that by bundling together transactions on Ethereum’s L1 blockchain, processing them “off-chain” on Shibarium’s L2 network at higher speeds, and returning them to Ethereum.

Shibarium allows Shiba Inu to be valued by the growth of its developer ecosystem, but its slower-than-expected expansion weighed down its price over the past year. To draw more developers to Shibarium, Shiba Inu added new developer tools and resources, developer-sponsored gas fees, and a revamped staking model to its network this July. If those efforts spur the development of more Shibarium-based apps, Shiba Inu’s price should stabilize.

2. The metaverse could support Shibarium’s growth

Earlier this year, Shiba Inu’s developers launched “SHIB: The Metaverse,” which houses over 100,000 plots of virtual land and accepts Shiba Inu as its default currency. This project is still in the early stages, but it might spur the development of other metaverse experiences, draw more developers to Shibarium, and encourage the adoption of Shiba Inu as a virtual currency.

3. The whales could wake up

Shiba Inu’s anonymous founder, Ryoshi, minted its entire supply of 1 quadrillion tokens prior to its launch. Today, it only has a circulating supply of 589.5 trillion tokens. It’s a deflationary token because it can only be “burned” (removed from circulation) instead of minted.

If Shibarium’s network activity warms up and Shiba Inu’s price rises again, its whales could burn more tokens to reduce its circulating supply and drive its price even higher. Among those whales, the top 10 wallets control roughly 62% of Shiba Inu’s circulating supply. The top 100 wallets hold about 77% of its total supply. If those big investors suddenly ramp up their purchases or burn trillions of tokens, its price could surge and draw in more investors.

4. Interest rates should decline

Lastly, lower interest rates should drive more investors back toward Shiba Inu and other meme coins. The Federal Reserve hasn’t cut its rates this year, but most analysts expect at least one or two rate cuts as inflation cools. Once that happens, Shiba Inu — which has more irons in the fire than many other meme coins — could soar again.

Should you buy Shiba Inu today?

Shiba Inu is still a speculative investment compared to Bitcoin and Ether, and it isn’t somewhere you should park your life savings. You need to keep your risk tolerance in mind, too. But if you want to take a chance on a volatile cryptocurrency that might deliver surprising gains over the next year, you should nibble on Shiba Inu today.