For more than 19 months, investors have benefited from a historic stock market rally. Since it hit the bottom of the pandemic on March 23, 2020, the benchmark S&P 500 won more than 100%. In some contexts, the S&P 500 has averaged an annual total return (i.e. including dividends paid) of more than 11% since the start of 1980.
But for hot cryptocurrency investors Shiba inu (CRYPTO: SHIB), a gain of 100% would not even make the needle anymore.
Shiba Inu accumulates earnings exceeding 17,000,000% in 15 months
On August 1, 2020, Shiba Inu debuted and printed a transaction of $ 0.00000000051 on day one. But just a week ago, SHIB tokens were trading hands for as much as $ 0.000088. It might be hard to tell given all the zeros, but it represents a gain of over 17,000,000% in about 15 months.
How does an investment gain 17,000,000% in such a short time?
One of the reasons is greater visibility. As the Shiba Inu coin rose through the ranks, in terms of performance and market capitalization, more cryptocurrency exchanges welcomed it for listing. In theory, the more exchanges that list SHIB, the greater the notoriety of the token and the more likely it is that the community will grow. As of November 3, more than 872,000 wallets held a stake in SHIB, according to CoinMarketCap.com.
Some credibility must also be given to ShibaSwap. ShibaSwap is a decentralized exchange launched in July that allows investors to wager their coins and earn passive income. What is remarkable is that this process forces investors to hold onto their SHIB for longer periods of time.
Tesla Motors‘ (NASDAQ: TSLA) CEO Elon Musk is also a key player in Shiba Inu’s historic gain. Musk recently adopted a Shiba Inu dog named Floki. Whenever he tweets about his dog or mentions the Japanese dog breed Shiba Inu via tweets or memes, investors have taken it as a cue to push SHIB higher. This is far from the first time Musk has shaken the cryptocurrency market with his tweets.
SHIB’s two biggest catalysts can’t stand its monstrous run higher
Looking ahead, there are two remarkable catalysts that the “hodlers” rely on to “bring down another zero” and help SHIB get closer and closer to $ 0.01 per token. Unfortunately, neither of the two catalysts can save Shiba Inu from a possible fall.
1. Announcement on Robinhood
The biggest catalyst seems to be a potential listing on the online trading platform Robin Hood (NASDAQ: HOOD), which was released to the public earlier this year. Robinhood is especially popular with young investors, who happen to be the same group of cryptocurrency-savvy people like Shiba Inu. In fact, a petition to register SHIB on Robinhood garnered over 450,000 signatures earlier this week.
With Shiba Inu reaching ninth place among all market-capitalized cryptocurrencies, and Robinhood having 18.9 million monthly active users, in the third quarter, a listing on the platform would make sense.
The problem here is twofold. First, Robinhood has lost much of its luster with retail investors. In January, Robinhood was forced to cut back trading in a number of heavily shorted stocks due to insufficient liquidity on its side. Even with 18.9 million monthly active users, it’s unclear how many would trade SHIB on the platform after numerous trading crashes and the aforementioned January incident.
Second, the precedents have shown that a major exchange listing tends to be a “buy the rumor, sell the news” type of event. For example there was a mountain of buzz around Dogecoin‘s (CRYPTO: DOGE) registration on Coinbase In early June. Although volume increased on June 1 and 3, with Dogecoin listed on Coinbase Pro and Coinbase respectively, it didn’t take long for DOGE to give up its gains. Just seven weeks after listing, Dogecoin was down around 60%.
We have seen similar reactions when new derivatives for Bitcoin (CRYPTO: BTC) are listed on Wall Street or on the options markets. For Bitcoin, the more common it becomes, in terms of quotation of derivative securities, the easier it is for pessimists to bet against it.
The point is, the SHIB roster on Robinhood is unlikely to deliver lasting pop.
2. Elon Musk’s tweets
The other big catalyst to build on is a steady diet of Elon Musk’s tweets. The CEO of Tesla has never shied away from sharing his opinion on cryptocurrency and regularly posts memes on the subject.
However, there is a mountain of issues with Musk’s tweets driving up the price of SHIB. For starters, there is nothing tangible behind what Elon is tweeting. By that I mean that a photo of his dog or a meme of a dog on the moon does nothing to improve Shiba Inu’s use case or make his network more effective. It might be fun, but it has no tangible value for the Shiba Inu community. As a reminder, SHIB has virtually no use outside of a cryptocurrency exchange.
To make matters worse, Elon Musk recently lifted the hood of his cryptocurrency wallet, and SHIB is not among his holdings. However, the main rival Dogecoin is one of Musk’s possessions. He even mentioned via tweet that he was working with developers to improve Dogecoin’s network. So when Musk posts photos of his dog hinting at a Shiba Inu dog going to the moon, there is no tangible connection to Shiba Inu.
Plus, it’s hard to ignore the fact that Musk has made fun of crypto before. Earlier this year, he announced that Tesla would keep Bitcoin on its balance sheet and accept Bitcoin as a payment method for new vehicles. Just weeks after the launch of this new payment method, Musk went unplugged, citing the negative environmental impacts that come with Bitcoin mining. Today, Bitcoin appears to be back in Musk’s good graces.
In other words, Shiba Inu hodlers shouldn’t expect wind in their sails from Elon Musk.
With history and utility not working in Shiba Inu’s favor, substantial downside seems likely.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.