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It has already risen 130% this year, can the Shiba Inu price rise even more?
One of the hottest cryptocurrencies this year was Shiba Inu (SHIB -2.19%). Year to date, it is up 130%, and the meme coin appears to be alive and well among retail investors. But with such impressive gains already in 2024, will it be too late to buy the digital currency? Or is the coin just getting started and could increased interest in the broader crypto market lead to greater momentum for Shiba Inu?
The number of companies accepting Shiba Inu has increased significantly in recent years
One of the reasons why Shiba Inu has gained prominence among crypto investors is that there has simply been more acceptance of cryptocurrency. Meme or not, more places are accepting it, and this is a positive development for Shiba Inu keepers because it could lead to greater demand for the coin.
According to data from Cryptwerk, there are 935 merchants in the online crypto directory’s database that accept Shiba Inu as a form of payment. This is 16% more than the 806 merchants who accepted a year ago and a 46% increase from two years ago.
There are more than 9,400 merchants that accept Bitcoin (Bitcoin -0.64%), according to the site, suggesting that Shiba Inu still has a long way to go to become as popular as the leading cryptocurrency. But it’s certainly heading in the right direction.
Volatility for Shiba Inu is inevitable
Nearly 92% of crypto wallets that hold Shiba Inu hold less than $1,000 of the meme coin. With Bitcoin, this percentage is slightly lower, at 84%. This suggests that Shiba Inu is more aimed at smaller investors than Bitcoin. But meme coin price movements may actually be due to larger investors.
Shiba Inu has a high whale concentration of 63%, according to CoinMarketCap. Whales These are wallet addresses that hold more than 1% of the currency’s circulating supply. And the higher the percentage, the greater the potential volatility, because a small number of whales can have a large impact on the price of the currency. In the case of Bitcoin, the concentration of whales is just 1.5%.
But there hasn’t been as much volatility lately. In early March, Shiba Inu trading volumes were high, often totaling more than $2 billion, and it was then that the coin was recovering. Lately, the currency has been slowing down and declining, and this is while volumes have also been lower (below $1 billion per day). This could be further proof of the strong impact that whales have on the currency. And the danger for investors is that price movements can be sudden and occur without much warning.
Should you buy Shiba Inu?
Shiba Inu’s valuation can take off at any time in any direction, and that’s what can be risky and exciting about meme stocks – their fluctuations can sometimes be unpredictable. And for that reason, it’s certainly possible that Shiba Inu’s valuation will rise even higher this year despite its impressive gains.
The danger for crypto investors is that there is no fundamental reason to expect the value of cryptocurrency to increase. The main investment thesis resides around the greatest fool theory and the expectation that someone will buy at a higher price. But this is purely speculative. If you are bullish on crypto, you are probably better off simply investing in Bitcoin or buying stocks with crypto exposure. Shiba Inu is an ultra-risky investment that is a clear bet given its vulnerability to large movements resulting from whale transactions.
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Bitcoin. The motley fool has a disclosure policy.