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Shiba Inu Hits a Milestone More Impressive Than Landing AMC

If you think the rally from the coronavirus pandemic bottom has been stellar for Wall Street, you should take a closer look at the gains from the cryptocurrency space. In a roughly 20-month stretch, the aggregate value of all digital currencies has catapulted from $141 billion to $2.66 trillion (about a 19-fold increase).

As you might imagine, Bitcoin and Ethereum (CRYPTO: ETH) have played a key role in pushing the total crypto market cap higher. These “blue-chip” coins make up approximately 62% of the aforementioned $2.66 trillion. But when the curtain closes on 2021 in less than five weeks, it’ll be meme coin Shiba Inu (CRYPTO: SHIB) garnering most of the attention.

A Shiba Inu-breed dog lying on a couch.

Shiba Inu-themed coins have skyrocketed in 2021. Image source: Getty Images.

Breaking down how Shiba Inu delivered 2021’s most-impressive gain

Take every big gain you’ve heard about in the stock market and throw it out the window, because no stock market rallies come close to what we’ve witnessed in Shiba Inu this year. At its peak, SHIB tokens rallied more than 121,000,000% between midnight Jan. 1 to its all-time intra-day high on Oct. 27. If you’d invested less than a dollar at the beginning of the year and we’re lucky enough to sell your stake at the peak, you became a millionaire.

Shiba Inu coin’s life-altering gains are the result of a confluence of factors. In no particular order:

  • The launch of decentralized exchange ShibaSwap has helped improve liquidity and offered hodlers the ability to stake their coins. Staking is critical to lengthening average hold time.
  • More crypto exchanges than ever are listing SHIB tokens for trading, which is helping to increase awareness of the coin and grow the community.
  • Ethereum co-founder Vitalik Buterin, who was gifted roughly half of Shiba Inu’s 1 quadrillion token supply by mysterious founder “Riyoshi,” sent approximately 410 trillion of these tokens to a dead blockchain address. In short, Buterin’s coin burn removed around 41% of SHIB’s supply with a single click.
  • The psychological fear of missing out (FOMO) has investors piling in without paying any credence to SHIB’s already monstrous year-to-date gains.

Perhaps most important, Shiba Inu gained some semblance of legitimacy when it snagged movie theater chain AMC Entertainment (NYSE: AMC) as its first major merchant. AMC CEO Adam Aron posted a Twitter poll in late October asking folks whether his company should accept SHIB for online payment. More than 87% of the 153,100 respondents favored the idea. According to Aron, AMC should have SHIB integrated for payment by the first quarter of 2022.

Silver dice with the words buy and sell being rolled across a digital screen displaying crypto charts and volume.

Image source: Getty Images.

This milestone has more meaning than Shiba Inu landing AMC

If this were any other month of Shiba Inu’s existence — it was launched on Aug. 1, 2020 — there would be no question that AMC accepting SHIB tokens would be the highlight catalyst. But November saw an even more important milestone for Shiba Inu and its community.

On Nov. 25, Thanksgiving Day, the Shiba Inu community officially reached seven digits, according to Etherscan. As of the late evening, 1,002,766 unique wallet addresses held SHIB tokens. That’s an increase of 51,000 unique hodlers over just the trailing two-week period.

For a relatively new cryptocurrency like Shiba Inu, growing its nominal hodler count is important for a variety of reasons. To begin with, the Shiba Inu community relies on each other for support amid wild swings. There’s almost something of a social-media-borne kinship that exists in owning Shiba Inu and supporting other hodlers of the coin. Officially hitting 1 million hodlers may fuel additional FOMO that, over the short run, could lift SHIB even higher.

Growing the number of hodlers is also important in the context of improving liquidity. Thanks to ShibaSwap, liquidity isn’t the issue it once was when Shiba Inu was still wet behind the ears. Nevertheless, adding new accountholders ensures adequate trading liquidity is present and further encourages crypto exchanges to add SHIB for listing (ahem, Robinhood Markets).

Lastly, it provides some level of validation that Shiba Inu could be here to stay. Though Shiba Inu is light year’s behind Bitcoin and Ethereum in terms of unique wallet holders, it’s quickly risen the ranks to 1 million investors.

A businessperson holding their hands up, as if to say, no thanks.

Image source: Getty Images.

Even with this milestone, it’s hard to take Shiba Inu seriously

While it would seem that catalysts are building for the world’s hottest digital currency, there are no shortage of reasons to believe that SHIB is the latest in a long line of smoke-and-mirror plays in the crypto space.

The biggest fight being waged by the crypto community is for real-world validation and application. When it comes to SHIB, a meager 365 merchants worldwide accept it as payment, according to online business directory Cryptwerk. Though this a markedly higher figure than from six weeks earlier, it’s still a laughably low number considering Shiba Inu is the 12th-largest digital currency. Aside from AMC, there doesn’t seem to be any real-world application for SHIB tokens.

To add to the above point, it’s also highly unlikely Shiba Inu hodlers are going to pay for AMC gift cards, tickets, and concessions with their SHIB. Not only are there potentially high transaction fees tied to the Ethereum network — Shiba Inu is an ERC-20 token built on the Ethereum blockchain — but all purchases with crypto in the U.S. trigger a taxable event. In other words, landing AMC is highly unlikely to result in increased adoption or real-world use.

But the real concern is that Shiba Inu offers nothing that’s a comparative improvement to other payment coins. Putting aside its 1 million-plus hodlers, SHIB is tied to the high-cost and occasionally slow Ethereum network. To be brutally honest, there are other payment coins that have markedly lower transaction fees and validate faster. There’s simply no reason for businesses to accept SHIB or take it seriously at this point.

Even with a growing community, the downside potential for Shiba Inu far outweighs whatever lift can be generated from social media buzz.

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Sean Williams has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bitcoin, Ethereum, and Twitter. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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