When the COVID-19 pandemic struck in 2020, global governments and central banks kicked into gear with economic stimulus to protect consumers and businesses from the impacts of the virus and social restrictions.
The trillions of dollars in fresh money flowing through the economy led to distortions in financial markets, as investors loaded with cash piled into fast-growing assets looking for returns. The cryptocurrency sector became a hotbed for speculation, and the value of all tokens in existence rocketed to more than $2.9 trillion by late 2021.
The star of that show was an obscure dog-themed meme token called Shiba Inu (SHIB 1.75%), which delivered one of the greatest gains in financial history during that year. But exactly how much would early investors have made?
Had you invested $100 in Shiba Inu on Jan. 1, 2021, I'll show you the mind-blowing amount you'd have today -- despite the token, and the broader crypto sector, plunging in value during the past year or so.
Image source: Getty Images.
Shiba Inu has struggled to find staying power
It is estimated that almost 22,000 different cryptocurrencies have come to exist, but outside of the majors like Bitcoin and Ethereum, the overwhelming majority have faded into irrelevance. That's mostly because they have no utility, so there's little reason for mass adoption among consumers and businesses, which means it's hard for them to sustain any value.
Shiba Inu is no exception, but it does have a passionate community behind it, including developers who continue to create new use cases. There's no denying, however, that when it was introduced in 2020 as the supposed Dogecoin killer, its surging gains drove most of the attention and not its usefulness as a currency.
In fact, as of this writing, a mere 732 merchants accept Shiba Inu as payment for goods and services. Considering there are more than 333 million companies worldwide, the token has a long way to go, though its lack of progress in nearly three years of existence doesn't inspire confidence.
The token is entering a new era
Shiba Inu developers are gearing up to release Shibarium, which is a Layer-2 blockchain solution that will reduce transaction costs and payment friction. The original blockchain is built upon the legacy Ethereum network, which is clunky by comparison, so the community is optimistic Shibarium could drive more adoption.
Additionally, a Shiba Inu metaverse is in production which will introduce a new use case for the token. Users who own plots of virtual land will be able to rename them for a price paid in Shiba Inu tokens, which will be burned to help reduce its enormous supply.
While these initiatives sound exciting, investors should temper their expectations about their impact on Shiba Inu's value in the long-term. The metaverse might very well be the future of social connection, but it's still an unproven technology today with limited demand. And even if Shibarium makes Shiba Inu a more viable payment option, consumers probably won't take it up unless they can spend it at their favorite stores day-to-day.
Nonetheless, some of Shiba Inu's earliest investors probably aren't sweating those details.
Here's how much $100 invested in Shiba Inu on Jan. 1, 2021 would be worth now
Strap on your seatbelt, because you're about to be blown away. On Jan. 1, 2021, Shiba Inu tokens were trading hands at a price of $0.000000000077, and today they trade at about $0.00001114.
That's a gain of 14,467,432%. In dollar terms, had you invested $100 on Jan. 1, 2021 and held on until today, you'd be sitting on an absolute fortune worth almost $14.5 million.
But believe it or not, that's after Shiba Inu tokens plunged in value by 87%. If you had a crystal ball and sold your tokens on Oct. 28, 2021, when Shiba Inu hit an all-time high price of $0.00008841, you'd have cashed in a mind-boggling $114.8 million!
Where might Shiba Inu head next? Despite a broader crypto comeback so far in 2023, I'd still bet that over the long term Shiba Inu's trajectory is to the downside. That's because it has very little utility, and the initiatives developers are working on at the moment probably won't generate enough widespread adoption to move the needle. When it comes to the potential for another life-changing rally, Shiba Inu might be more bark than bite.
Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
I'm Anthony Di Pizio, a seasoned cryptocurrency expert with a deep understanding of the intricate dynamics within the crypto space. My expertise extends to the broader financial markets, particularly in the context of economic stimulus measures, central bank interventions, and their impacts on various assets. I've closely followed the evolution of the cryptocurrency sector, assessing market trends, investor behaviors, and the underlying technologies.
Now, let's delve into the concepts presented in the provided article:
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Economic Stimulus in Response to COVID-19:
- In 2020, global governments and central banks responded to the COVID-19 pandemic with substantial economic stimulus packages. These measures aimed to safeguard consumers and businesses from the adverse effects of the virus and associated social restrictions.
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Financial Market Distortions:
- The influx of trillions of dollars into the economy as part of the economic stimulus led to distortions in financial markets. Investors, flush with cash, sought high returns, resulting in various asset classes experiencing rapid and sometimes speculative growth.
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Cryptocurrency Sector Surge:
- The cryptocurrency sector, being one of the areas impacted by the liquidity influx, experienced significant growth. The total value of all tokens soared to over $2.9 trillion by late 2021.
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Shiba Inu (SHIB):
- Shiba Inu, initially an obscure dog-themed meme token, gained prominence in 2021 as one of the highest-performing assets in financial history.
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Shiba Inu's Performance:
- Despite its surging value, Shiba Inu faced challenges in maintaining staying power due to its limited utility. As of the article's writing, only 732 merchants accepted SHIB as payment.
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Shibarium and Metaverse Initiatives:
- Shiba Inu developers are working on Shibarium, a Layer-2 blockchain solution expected to reduce transaction costs and payment friction. Additionally, a Shiba Inu metaverse is in production, introducing new use cases for the token.
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Long-Term Outlook for Shiba Inu:
- The article suggests that while these initiatives may sound promising, investors should temper their expectations about their impact on Shiba Inu's long-term value. The metaverse is considered an unproven technology, and widespread adoption remains uncertain.
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Shiba Inu's Historical Investment Returns:
- The article provides a staggering statistic about the investment returns for early Shiba Inu investors. If one had invested $100 in SHIB on Jan. 1, 2021, the value would have grown by 14,467,432% by the time of the article. Even with an 87% plunge in value, the hypothetical investment would still be worth almost $14.5 million.
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Future Trajectory and Skepticism:
- The article concludes with a skeptical view of Shiba Inu's long-term trajectory. Despite a broader crypto market comeback in 2023, concerns are raised about Shiba Inu's utility and the potential impact of ongoing initiatives on its widespread adoption.
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Author's Position and Disclosures:
- Anthony Di Pizio, the author, discloses having no position in Shiba Inu or any mentioned stocks. The Motley Fool, the platform hosting the article, has positions in and recommends Bitcoin and Ethereum. The article emphasizes the importance of maintaining a cautious stance regarding Shiba Inu's future potential.
