Cryptocurrency token Shiba Inu (CRYPTO: SHIB) achieved an extraordinary return of over 43,000,000% in 2021, a level of success rarely witnessed in the financial markets. This meteoric rise translated a mere $3 investment into more than $1 million, demonstrating the immense potential of this digital asset.
However, Shiba Inu has since experienced an 89% drop from its all-time high due to its failure to gain traction as a payment mechanism and the deteriorating investor sentiment toward speculative cryptocurrencies beginning in 2022.
Despite this downturn, the tide may be turning in the crypto industry’s favor. In 2024, Bitcoin has already surged by 23%, propelling the total value of all existing cryptocurrencies to $2 trillion, a milestone not reached in nearly two years.
Crypto Sentiment Amid Industry Fluctuations
In 2021, the cryptocurrency frenzy reached its peak with the total value of all tokens nearing $3 trillion. However, the industry experienced tumultuous times in 2022 as several prominent crypto experiments faltered. The de-pegging of the TerraUSD stablecoin resulted in an estimated $60 billion loss for investors, further compounded by the collapse of FTX, a leading crypto exchange steeped in fraud and deception. Consequently, by the close of 2022, the crypto industry’s value had dwindled to a mere $830 billion.
The industry witnessed a modest recovery in 2023, albeit constrained by soaring interest rates, which dampened investors’ risk appetite. In contrast, leading coins such as Bitcoin and Ethereum showed signs of a positive trajectory in 2024, inching closer to their all-time highs.
Within the speculative segment of the market, Shiba Inu’s residence, there remains a sense of restraint. Meme tokens plunged to such depths over the past few years that investors are still wary of engaging. Furthermore, Shiba Inu’s failure to establish itself as a widely accepted payment method, with only 917 merchants worldwide currently embracing it, offers little cause for optimism among investors or consumers, potentially limiting its long-term value trajectory.
The $589 Trillion Predicament
Investors are increasingly cognizant of the primary obstacle confronting Shiba Inu: with 589.3 trillion tokens in circulation, the token trades at an unconventional price point of $0.0000098. Even a distant prospect of reaching one cent ($0.01), let alone $1, indicates a staggering total value of $5.8 billion for all 589.3 trillion tokens at the current price.
Simple arithmetic indicates that for Shiba Inu to ascend to $1, it would necessitate an astronomical market capitalization of $589.3 trillion. To put this in perspective:
- Microsoft, the world’s largest company, is valued at $3 trillion.
- U.S. gross domestic product (GDP) in 2023 amounted to $27.9 trillion.
- Global wealth, encompassing all assets and cash held by households, corporations, and governments worldwide, stood at $454 trillion in 2022.
Hence, with a value of $1 per token, Shiba Inu would surpass the entire recorded global wealth, underscoring the impracticality of a $1 valuation under the existing circumstances.
Despite these challenges, the Shiba Inu community has initiated “burning” tokens – a process involving the permanent removal of tokens from circulation. This entails sending tokens to a “dead” wallet or leveraging platforms such as the Shiba Search internet search engine and a music playlist to utilize advertising revenue and royalties to purchase and burn Shiba Inu tokens. Theoretically, the reduction in supply resulting from burning tokens could naturally propel Shiba Inu to $1 as the price per token escalates to sustain a consistent market capitalization.
Image source: Getty Images.
Realizing Gains and Viability for Investors
Given Shiba Inu’s current market cap of $5.8 billion, a supply reduction to 5.8 billion tokens would be necessary to naturally elevate the price per token to $1. This implies that approximately 99.99998% of the existing 589.3 trillion tokens would need to be burned.
Despite burning approximately 353 million Shiba Inu tokens over the past month, translating to 4.2 billion tokens annually, it would take an estimated 140,300 years to burn enough tokens to justify a $1 valuation, making it an improbable outcome for 2024. Moreover, even if achieved, this supply reduction would ultimately fail to yield profit for investors. To realize the required token burn, nearly every Shiba Inu tokenholder would need to participate, resulting in a 99.99998% reduction in their token holdings. This would leave them with substantially fewer tokens, despite their individual worth rising to $1, underscoring the limited impact of token burning on actual investor gains.
Overcoming Shiba Inu’s supply challenge represents a colossal undertaking yielding minimal reward in the end. The key to augmenting the token’s actual value hinges on delivering compelling reasons for both investors and consumers to adopt it, an aspect that currently appears to be lacking.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
