What's Happening to Shiba Inu?

Since the collapse caused by the coronavirus in March 2020, the widely followed S&P 500 has doubled in value, starting March 2. But according to CoinMarketCap.com, the aggregate value of all digital currencies has catapulted more than 12 times to $ 1,94 trillion since they hit their March 2020 low.

While prominent cryptocurrencies are responsible for most of this nominal increase in market value, it is high-speed tokens like Shiba Inu (quotation SHIB) that garnered all the attention.

Despite the surge in 2021, Shiba Inu won't go far

Last year Shiba Inu was practically unstoppable. At its highest intra-year gain in late October, it had increased in value by more than 121.000.000% from where it started in 2021. It ultimately finished as high as around 46.000.000%. Unsurprisingly, these historic gains made Shiba Inu one of the most sought-after cryptocurrencies in the United States last year.

A number of factors worked in SHIB's favor, including increased visibility through new cryptocurrency announcements and the launch of the decentralized exchange ShibaSwap in July 2021. Shiba Inu is also benefiting from some dynamics in the cryptocurrency market (e.g. minimal activity short selling and no derivatives / options to bet with against SHIB), as well as the excitement surrounding numerous upcoming updates and ecosystem product launches.

But despite SHIB's success, it's impossible to overlook its flaws

For example, Shiba Inu does not have clearly defined competitive advantages. At the moment, it is nothing more than an ERC-20 token built on the Ethereum blockchain (CRYPTO: ETH). In simpler terms, it is a payment currency. There is no shortage of payment coins among the nearly 18.000 digital currencies listed on CoinMarketCap.com. Without true differentiation, SHIB will have an almost impossible task of standing out in a crowded space.

To build on this point, it's not a particularly popular payment coin either. While Shiba Inu is hugely popular on social media platforms, only 641 mostly obscure merchants accept SHIB as a form of payment. This is a drop in the bucket when you consider that there are over 32 million businesses in the United States alone and more than 500 million entrepreneurs globally.

Historical precedents would also suggest that Shiba Inu's future points much lower. In previous cases where payment coins or protocol tokens on payment networks have provided short-term historical gains, they have almost always continued to lose 93% to 99% + of their value in the 12 months to 26 months following their respective peaks. A similar fate likely awaits Shiba Inu.