Shiba Inu, the ‘DOGEKILLER’ has been in the news lately. Major exchanges like Binance and Coinbase have listed SHIB tokens, and Elon Musk has now diverted his attention to Shiba Inu.
All these headlines will make you wonder – will Shiba Inu coin reach $1?
Sorry to burst the bubble, but It is improbable that Shiba Inu coin will reach $1 due to its high supply, market cap, and lack of major utility to drive Shiba Inu’s value.
Keep reading, and I’ll break down all the reasons why Shiba Inu wouldn’t be reaching $1. I will also highlight how Shiba Inu has more potential than other meme coins.
Tokenomics of Shiba Inu Coin
Shiba Inu Coin (SHIB) is an ERC-20 token launched in August 2020 by a pseudonymous developer Ryoshi. This dog-themed meme coin was essentially created to overthrow Dogecoin.
To answer whether or not SHIB will reach $1, we need first to understand its tokenomics.
Shiba Inu has a total supply of one quadrillion. Out of these, there are 394,796 billion SHIB tokens in circulation today.
As for its price, currently, each SHIB is worth $0.000006713. The market cap of SHIB tokens is $2.6 billion as of now.
Shiba Inu has a massive supply which makes it impossible for this meme token to reach $1. Because, for SHIB to reach $1, its market cap should be over $400 billion, which will make SHIB larger than Ethereum. This is impossible.
In the crypto world, the demand/supply balance and the asset’s utility drive its value. It’s simple: a cryptocurrency with high demand due to its utility but a finite supply will have a significantly higher value.
Consider Bitcoin. It has a limited supply of 21 million and comparatively skyrocketing demand due to its utility of being a store of value. This is the reason why it is the largest cryptocurrency in the world. Now, as the demand for Bitcoin will increases, its price will further move upwards.
On the other hand, SHIB has a huge supply with no utility. Even if the demand increases, there are enough Shiba Inu coins to match the demand.
As a result, the value of SHIB is unlikely to reach $1 unless Elon Musk tweets about it or it has some path-breaking utility.
While you determine the future potential of an asset, you should look in terms of market cap and not the dollar value of that asset. Market capitalization is the product of the value of each token and the total number of tokens in circulation. Therefore, it gives you the total dollar market value of an asset.
Take Dogecoin, for example; it has an unlimited supply. DOGE has a market cap of $31.5 billion, making it the 9th largest cryptocurrency by market cap. However, its dollar value is only 24 cents. Now consider Yearn Finance’s YFI tokens. YFI has a fixed supply of 30,000 tokens, and its market cap is currently $1.2 billion. However, one FYI is worth over $34,000 as of now, all thanks to its limited supply and high demand fueled by its utility.
This shows that a cryptocurrency like FYI with $1.2 billion has more potential to grow its market cap than a meme coin like DOGE or SHIB, no matter they have a higher market cap.
Cryptocurrencies are distributed either by fair launch or are pre-mined.
Fair launch is when the tokens are not allocated to founders, partners, etc., and are entirely mined, governed, and run by the community. Whereas, when tokens are distributed to their founders and other stakeholders before opening the token sale to the public, the token is called a pre-mined asset.
Out of the total supply of one quadrillion, 50% of the SHIB tokens were locked in the ETH/SHIB liquidity pool on Uniswap. Therefore, Rysohi followed the namecoin marketing trend and sent the remaining half of the total SHIB tokens to Vitalik Buterin’s cold wallet address, making Shiba Inu a pre-mined token.
Vitalik chose to burn 90% of the SHIB tokens he received and donate the rest. As a result of Vitalik burning SHIB tokens, over 410 trillion SHIB tokens worth $6.7 billion as of May 2021 were taken out of circulation.
Now that you know how SHIB is distributed, let’s take a look at SHIB’s token circulation. SHIB has an even circulation, unlike DOGE, where 100 people hold a majority of DOGE tokens.
This is a significant positive for SHIB. Because if only a few people would have a majority of SHIB tokens, they might sell the tokens when it increases in value, thereby crashing SHIB’s market.
Shiba Inu is dubbed as the ‘DOGEKILLER’. However, in his first medium post, Ryoshi described Shiba Inu as an experiment in community governance and decentralization.
Despite being the flagship token of the Shiba Inu ecosystem, SHIB has no utility. However, you can stake SHIB tokens to earn BONE tokens and earn a fee from the ShibaSwap exchange transactions. Nonetheless, this utility isn’t enough to take SHIB to the $1 mark.
Shiba Inu Is More Than Just A Meme Token!
Shiba Inu is no longer just a meme token.
On July 6, 2021, the Shiba Inu community launched their flagship decentralized exchange – ShibaSwap. Within a single day of its launch, ShibaSwap surpassed $1 billion in total value locked (TVL). Now that the hype has subdued, ShibaSwap now has a TVL of $248.96 million. Still, this is an impressive number.
With ShibaSwap, you can stake your tokens, swap crypto tokens, provide liquidity, migrate your Uniswap liquidity provider (LP) tokens to ShibaSwap, track your portfolio, and claim your rewards.
These rewards are distributed in BONE and LEASH, ERC-20 tokens native to the Shiba Inu ecosystem. Both these tokens have immense value in the Shiba Inu ecosystem.
Products like ShibaSwap will encourage people to invest in SHIB tokens as they see value in the Shiba Inu ecosystem.
Market Sentiment – Shiba Inu Till Now
Since its launch in August 2020, Shiba Inu was asleep until this February when Ryoshi published his second medium post indicating the return of SHIB.
Later in March, Shiba Inu token pumped 300%, all thanks to Elon Musk’s tweet. Finally, after a month, the Shiba Inu community released their ‘Woofpaper’ (whitepaper) only to relaunch it in May with significant updates.
In May, the SHIB tokens again caught headlines after Vitalik burned Shiba Inu tokens worth $6.7 billion. Binance announced that it would list Shiba Inu tokens on its exchange. Within 48 hours of this announcement, SHIB gained nearly 1000%.
Till now, September is in SHIB’s favor. Elon Musk tweeted a picture of Shiba Inu on September 13, causing SHIB tokens to surge nearly 1000%. Another price pump came on September 16 when Coinbase also announced that SHIB tokens are now available on their platform. Following this announcement, SHIB is up by 25%.
Shiba Inu has a massive supply, and thus, it is improbable for SHIB tokens to reach $1.
However, Shiba Inu stands out from other meme tokens as it has launched its native decentralized exchange ShibaSwap thereby adding some value to its ecosystem. Moreover, SHIB’s listing on exchanges like Coinbase and Binance further adds some credibility to the project.
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Anish loves reading, researching, and writing about crypto and blockchain. He started his crypto journey early in 2017, what started as a fad is now a full-time hobby. He curates guides after thorough research on platforms and is responsible for the most in-depth guides on the site. You will find him walking his dog (not Doge) when he is from his Laptop.