If you took $ 3 and used it to buy Shiba Inu cryptocurrency (CRYPTO: SHIB) on January 1 of this year, you would have more than $ 1,29 million today, assuming you held out.
Yet the meme token fell 62% from its all-time high, when your $ 3 would have been worth as much as $ 3,4 million.
It is a truly unique return in life that even the more experienced investors they usually never get to see. By comparison, if you bought stock in the e-commerce giant Amazon when it went public in 1997 and held out, you would have earned a 195.900% return to date. Not only is that yield a fraction of that of Shiba Inu, but it would have taken 24 years versus just 12 months for the token.
But investors reading this right now may be wondering if the current Shiba Inu price decline represents a buying opportunity, and of course, if there is a chance of getting the same blockbuster returns experienced earlier.
Dogecoin offers some perspective
Dogecoin (CRYPTO: DOGE) is often considered the original meme token. It has skyrocketed in price and importance, thanks to some of the most famous personalities in the social media world promoting it. Perhaps one of his most famous supporters is Tesla Motors (NASDAQ: TSLA) CEO Elon Musk, who brought him into the mainstream with his guest appearance on Saturday Night Live.
Over the past 12 months, Dogecoin has gone from a low of $ 0,0031 to a high of $ 0,74, which represents a 23.300% price increase. While this is relatively tame when compared to Shiba Inu, both tokens now trade at a similar market cap (the total value of all respective tokens in circulation multiplied by the price). Shiba Inu is worth $ 18,6 billion, while Dogecoin is worth $ 24 billion.
Since hitting an all-time high of $ 0,74, Dogecoin has been on a steady downtrend, settling close to $ 0,18 today. This is a steep 75% drop, so investors who bought tokens near the highs are sitting on substantial losses. To make matters worse, it never felt like he could truly recover his best levels.
But earlier this week, Musk announced that Tesla would begin accepting Dogecoin for some merchandise items, and that pushed the price up nearly 40% before phasing out. This action sums up a huge problem Dogecoin and Shiba Inu have in common: Only a tiny number of businesses actually accept these tokens as payment for goods and services, so consumers have no reason to adopt them. Therefore, price increases tend to be unsustainable.
Traders have minimal appetite for cryptocurrencies
Cryptocurrencies in general have been touted as a potential replacement for regular currencies, but so far the evidence suggests they are mostly just vehicles of speculation. Furthermore, their wildly volatile nature makes them a meager store of value; Would the average consumer entrust its value to tokens like Dogecoin and Shiba Inu, which have dropped in value by up to 75% in just a few months?
Likewise, it would be difficult for a business to justify accepting such tokens as payment, because a rapid decline in value could erode its profits from the actual sale of goods and services. And based on a list of leading merchants, only 1.974 mostly obscure companies are willing to accept Dogecoin as payment. Even fewer accept Shiba Inu - just 387 - and about 15% of those merchants sell crypto-related services.
The recovery of Shiba Inu, therefore, depends on the willingness of new investors to come in and pay higher and higher prices for the token, based on no real fundamental driver. Sadly, Dogecoin's story suggests there is likely to be no widespread adoption of the Shiba Inu (even on a speculative level). This is why the token will find it nearly impossible to gain the mainstream notoriety it needs to rise in value.
