Bitcoin Is Up 50% in 2024, but This Other Cryptocurrency Has More Than Doubled - Tools for Investors | News
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Bitcoin Is Up 50% in 2024, but This Other Cryptocurrency Has More Than Doubled


Bitcoin (CRYPTO: BTC) is the world’s largest cryptocurrency. It has a market capitalization of $1.3 trillion as of this writing, so it accounts for about half of the total value of the entire crypto market ($2.4 trillion).

It has logged a gain of about 50% in 2024 so far, and it touched a new high of $69,171 yesterday. The crypto is benefiting from the approval of Bitcoin exchange-traded funds (ETFs), which are creating new sources of demand. Plus, the pessimism toward cryptocurrencies that took hold in 2022 appears to have subsided, and investors are growing comfortable with the asset class once again.

Some of the action in the meme-token segment of the crypto industry is further evidence of an increasing appetite for risk. For example, Shiba Inu (CRYPTO: SHIB) has logged a return of more than 200% in 2024 (as of March 5), trouncing Bitcoin.

Shiba Inu rose to prominence on the back of an astounding 45,278,000% gain in 2021, which could have turned a perfectly timed investment of just $3 into more than $1 million. It has since declined 75% from its all-time high — even after factoring in its strong gain this year — but could this be the start of another historic run?

Investors are warming up to the cryptocurrency industry once again

The year 2022 was arguably the most turbulent in the history of the crypto industry. A series of high-profile implosions rocked investors’ confidence, from the de-pegging of the TerraUSD stablecoin to the collapse of FTX, one of the world’s largest crypto exchanges.

Combined with broader economic headwinds like soaring inflation and rising interest rates, Bitcoin was trading 76% below its peak by the end of 2022. Even shares of Coinbase, probably the most regulated crypto exchange in the world, lost 86% of their value that year.

The aforementioned failures cleansed the crypto industry of the exuberance from prior years that gave rise to fraud and bad actors. The prosecution of FTX founder Sam Bankman-Fried, and even Binance’s Changpeng Zhao in 2023, signaled that regulators stand ready to defend investors. That restored some confidence in the asset class.

With the stock market staging a powerful rally in 2023, sentiment toward risk assets turned overwhelmingly positive, which was the green light investors needed to flock back into major cryptocurrencies like Bitcoin. The speculative end of the market, where Shiba Inu resides, wasn’t ready to follow along and failed to get off the ground last year.

However, risk assets have continued to gain momentum in 2024, and Shiba Inu is finally participating in the rally.

Shiba Inu faces structural challenges

There used to be hope that cryptocurrencies would be used like traditional currencies. In that scenario, consumers and businesses would have to adopt them, which would continue to drive their value higher.

However, of the 334 million businesses registered worldwide, just 9,393 accept Bitcoin as payment. Shiba Inu is faring even worse, with just 920 businesses on board.

Many investors argue that Bitcoin is a store of value similar to gold, and that isn’t far-fetched considering it has a limited supply and it’s the most valuable of all cryptocurrencies. Shiba Inu, on the other hand, has an abundance of supply, and without widespread adoption as a payment mechanism, it’s only useful as a vehicle for speculation.

Its supply issue will serve as a headwind to future price gains. There are 589.3 trillion tokens in circulation, which is why it trades at a price of just $0.000032 despite having a market capitalization of $19 billion.

The community is making an effort to trim the supply by burning Shiba Inu tokens, but it might be an exercise in futility.

A Shiba Inu dog standing in a garden.

Image source: Getty Images.

Investors shouldn’t rush to buy Shiba Inu

It can be tempting to buy a meme token like Shiba Inu especially considering its historic millionaire-making run in 2021. But history is no indicator of future performance, and timing speculative ebbs and flows in any asset is impossible.

Those who bought Shiba Inu at the height of the frenzy in 2021 have lost three-quarters of their money. And who knows — its current price could be the top for this cycle.

Investors who want exposure to cryptocurrencies might be best off sticking with the leader, Bitcoin. Since there is a wide variety of ETFs to choose from, owning it has never been simpler.

Should you invest $1,000 in Shiba Inu right now?

Before you buy stock in Shiba Inu, consider this:

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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 and Coinbase Global. The Motley Fool has a disclosure policy.

Bitcoin Is Up 50% in 2024, but This Other Cryptocurrency Has More Than Doubled was originally published by The Motley Fool



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