Shiba Inu (CRYPTO: SHIB) burst onto the scene in 2021, when the cryptocurrency market was experiencing a raging bull market during the second year of the pandemic. The speculative fever ran high at this time.
But this meme digital token has come crashing back to earth. Investors looking to buy Shiba Inu (CRYPTO: SHIB) while it’s 89% off its peak price should forget about it. Meanwhile, Bitcoin (CRYPTO: BTC), the world’s most valuable cryptocurrency, could make you rich.
Shiba Inu deserves criticism
Shiba Inu is a cryptocurrency that lives on top of the Ethereum network, an intentional design by the founders to add functionality. This setup makes Shiba Inu compatible with a wide range of decentralized applications, which is what makes it different from Dogecoin, its inspiration.
I’d argue that Shiba Inu, as well as other cryptocurrencies, are still primarily a tool for financial speculation. This means that people will buy Shiba Inu tokens not because they want to utilize them in some way, but for the potential of earning huge returns.
However, Shiba Inu can be used for peer-to-peer payments, non-fungible tokens, and staking. And there have been upgrades to the system, like the Layer-2 Shibarium scaling solution, which can speed up transaction times and lower costs. There are also plans to make metaverse applications. These developments may make Shiba Inu more competitive with Ethereum and Solana.
Shiba Inu’s price action in recent times indicates diminishing interest from the investment community, though. The fact that the overall crypto market has more than doubled in the past year while Shiba Inu declined by 25% tells me this digital token’s best days are behind it. I’d expect it to outperform the industry and other prominent cryptos in a strong bull market, but this didn’t happen.
There is a coin-burning mechanism in place to reduce Shiba Inu’s gargantuan token supply of 589 trillion. But at a daily burn rate of 243,000, it’s barely putting a dent in that high number. As a result, it’s easy to be pessimistic about Shiba Inu’s long-term potential.
Bitcoin is already the winner
When Bitcoin was launched in 2009, it was the first time ever that two people could send money to each other digitally without the use of an intermediary. This was a breakthrough that built on tech innovations of prior times. Thanks to its meteoric rise, Bitcoin now sports a market cap exceeding $1 trillion.
The best way to view Bitcoin today is through the lens of it being a top store of value. Compared to gold, which many people have long viewed as the best in this regard, Bitcoin has superior qualities. The leading crypto is more portable, divisible, verifiable, and useful in actual transactions.
And perhaps more importantly, there will only ever be 21 million Bitcoin in circulation. It’s a hard supply cap etched in the software code. Gold, on the other hand, could see its supply spike should there be a demand bump that warrants investing more in mining capabilities.
Even though Bitcoin has already soared 210% since the start of 2023, there is lots of upside. So, if you’ve been sitting on the sidelines, missing the latest rally, it’s still a good idea to remain optimistic.
The digital asset is set to undergo a halving in April. This is when the new Bitcoin rewards that miners receive for processing transactions and securing the network gets cut in half, effectively reducing the supply growth rate. It has historically occurred in the middle of a bull market. We’re seeing something similar play out today.
And with the early success of the new spot Bitcoin exchange-traded funds, it’s likely that a lot more capital will flow to Bitcoin over time, now that there’s a regulated investment vehicle available.
Shiba Inu doesn’t deserve your attention. Instead, focus on Bitcoin’s impressive potential.
Should you invest $1,000 in Bitcoin right now?
Before you buy stock in Bitcoin, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bitcoin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of February 20, 2024
Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.
Forget Shiba Inu: This Cryptocurrency Could Make You Rich was originally published by The Motley Fool