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Shiba Inu Is Still a Risky Speculative Bet Despite Recent Rise

InvestorPlace - Stock Market News, Stock Advice & Trading Tips Investors are betting big on Shiba Inu, hoping for quick returns after missing out on the Dogecoin wave, but the...

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This story originally appeared on InvestorPlace

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Investorplace.com - InvestorPlace

Shiba Inu (CCC:SHIB-USD) is in the headlines for mouthwatering gains in 2021. Social media influencers are becoming more active in voicing their opinions on volatile cryptocurrencies. Many of them are piling into meme coins. And we see the results with coins like Shiba Inu generating some serious momentum.

A close-up shot of a Shiba Inu with a grinning face.
Source: Wollertz / Shutterstock

Cryptocurrency investing is rife with risk. However, meme coins are so sensitive to price swings based on who’s talking about them makes this an even greater gamble than Bitcoin (CCC:BTC-USD).

Dogecoin (CCC:DOGE-USD) and Shiba Inu are both speculative bets. Most people won’t have a long-term thesis behind why they want to hold these coins for an indefinite period. But speculators might find some appeal with these coins as an investment opportunity for quick gains.

Experts recommend diversifying across multiple coins to protect your investment. However, every coin has to have use cases and functionality for long-term success.

Bitcoin is a digital currency with an ecosystem carefully crafted to have built-in scarcity. The limited number of bitcoins makes it attractive as both investment and a method for exchanging goods, services, or assets on the peer-to-peer network without relying heavily upon third parties like banks or governments. It has clearly defined use cases. And institutional interest in BTC is at an all-time high.

On the other hand, many altcoins are not very useful because they lack essential features. They also have no supply cap, making them difficult to use for purposes other than speculation on exchanges like Binance or Coinbase (NASDAQ:COIN), where their prices often fluctuate wildly due to news headlines. Shiba Inu fits this bill. Hence, investors continue to think of it as a gamble.

Shiba Inu Is Trading on Momentum

Altcoins are often community-based, with Shiba Inu being one of them, which means their success depends on its user base’s size and growth rate. The incredible success of both Shiba Inu and Dogecoin can be attributed to their supporters hyping them up.

Elon Musk, the CEO of SpaceX and Tesla (NASDAQ:TSLA), is a cryptocurrency enthusiast. He often tweets about different cryptocurrencies with his millions of followers on Twitter (NYSE:TWTR), which seems to impact their prices. He has uploaded pictures of his new Shiba Inu puppy Floki several times this year. Whenever he has done so, it has led to a substantial increase in price. Again, this is has nothing to do with its fundamental strength or use cases.

Take It With a Pinch of Salt

The rollercoaster ride of the past few weeks has been exhilarating for Shiba Inu traders. Volatility is on display, and Shiba Inu touched record heights late last week before it produced a bit of downturn.

Many cryptocurrency traders are cautious and conservative, preferring to stay away from Shiba Inu. They prefer investing in Ethereum (CCC:ETH-USD) and Bitcoin because they offer more stability. Shiba Inu, on the other hand, reminds people of the early days in the crypto marketplace. Where you can make millions or go broke within the space of a few trading sessions.

Take the recent few weeks as an example. The coin was seeing a bull run of epic proportion. But then news items emerged that 40 trillion coins could go on sale soon. And then a sharp selloff occurs. It once again shows how fickle momentum-based coins can be.

Never Invest Money That You Can’t Afford to Lose

SHIB recently surpassed its first major resistance level at $0.0000717. However, we are back to square one after the recent news surrounding the mystery billionaire moving equal amounts of Shiba Inu to four different addresses, totaling over 40 trillion coins.

The Shiba Inu needs a long, plotted-out plan if it hopes to reach its all-time high of $0.00008616. A successful rally requires patience and dedication from traders as well as momentum in the market itself. But the one thing that will help it long term are use cases, which are nonexistent at the moment.

On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence.

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