The cryptocurrency market can sometimes seem like a puppy mill, churning out new coins that generate a lot of initial excitement.
Take Shiba Inu, for example. The cryptocurrency token is named after the dog breed that’s the same mascot of another popular cryptocurrency, Dogecoin — a crypto asset that started as a joke but has become popular with the “meme” crowd.
While it’s less than a year old, Shiba Inu (SHIB) already has a market value of more than $3.8 billion as of early June 2021, making it the 31st-largest cryptocurrency by market capitalization, according to CoinMarketCap. In another sense, Shiba Inu is quite small. Each token is only worth $0.000009677. That makes it attractive for new cryptocurrency investors, especially when well-established picks such as Bitcoin cost more than $38,000 for a single token.
Just because something is popular, though, doesn’t mean it’s a good investment. Experts recommend doing a lot of research before investing in the cryptocurrency market. Here’s what investors should understand before buying Shiba Inu coin:
— What is Shiba Inu coin?
— The benefits of Shiba Inu coin.
— The risks of Shiba Inu coin.
— How can investors decide?
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What Is Shiba Inu Coin?
Shiba Inu is a token that exists on the Ethereum blockchain. The coin’s mysterious founder, known as “Ryoshi,” says the project is “an experiment in decentralized spontaneous community building.”
While there’s no cap on the maximum number of Dogecoin units, there is a cap — albeit a lofty total supply of 1 quadrillion — for Shiba Inu units.
Both Shiba Inu and Dogecoin, like other meme investments, have gained in value as investors discuss their perceived merits online and elsewhere in society.
The Shiba Inu white paper — dubbed by its creators as its “woof paper” — lists leaders of international chatrooms, social media influencers and meme makers as part of the community behind Shiba Inu’s success.
“Until the point at which it begins to become accepted as a means of payment for goods and services, a crypto’s value is almost entirely a product of its social media buzz, and right now Shiba is definitely a top-10 crypto in that category,” says Eric Berman, senior legal editor of U.S. finance at Thomson Reuters Practical Law. “Those looking to spot the next breakout coin are well-advised to join Reddit and Twitter, and follow the hashes.”
What Are the Benefits of Shiba Inu Coin?
In addition to the hype from influencers, Shiba Inu’s appeal comes from the desire for passive income from staking and the fear of missing out from those who weren’t part of the Dogecoin gold rush.
The ripple effect from Dogecoin’s rise in price has helped other meme tokens including Shiba Inu, creating the potential for short-term gains, says Marie Tatibouet, chief marketing officer with Gate Technology.
[READ: How to Become a Day Trader.]
Another benefit may be more philosophical. “Many see meme tokens such as Dogecoin and Shiba Inu as projects that are nothing more than a joke, but it has acted as a first step for many crypto newcomers, who are likely to invest in other projects,” Tatibouet says. “So, in the long term, the wider crypto market is likely to see further growth and interest.”
With Shiba Inu’s low price, investors can get in while risking what amounts to the cost of a fast-food lunch. So for those who want to dabble in cryptocurrencies, Shiba Inu provides a low-cost avenue.
What Are the Risks of Shiba Inu Coin?
It’s important to remember that cryptocurrencies themselves are a risky asset class; within that asset class, speculative altcoins such as Shiba Inu tend to carry even more risk. It’s only worth considering for investors with a high tolerance for risk.
“Cryptocurrencies, and digital assets as a whole, are still very much in a nascent stage of development,” says Jahon Jamali, chief marketing officer with Sarson Funds. “As with any emergent technology, there will be more losers than winners.”
[READ: The 5 Best Cryptocurrency Trading Sites.]
With Shiba Inu, and as with other cryptocurrencies, volatility seems to be the most apparent risk.
Tatibouet says the meme token frenzy isn’t likely to last long, leaving the potential for some investors to see sudden losses if interest starts to fade. Dogecoin’s recent dip is a good example, as its price plummeted immediately after Tesla (ticker: TSLA) CEO Elon Musk — who frequently posts bullish tweets about Dogecoin — hosted “Saturday Night Live” in early May.
“(Shiba Inu’s) price could certainly go higher, but it could just as easily come down, bringing many investors with it,” says Ben Weiss, CEO of CoinFlip.
How Can Investors Decide?
While it may sound boring, doing your homework is one the best ways to hedge against making a bad investment, whether in the cryptocurrency market or elsewhere.
“Thorough research is a must if you’re looking at investing in any cryptocurrency,” Tatibouet says. “Investing on a whim has ended in tears for many.”
For crypto investments, research includes checking coin supply and reading white papers. Weiss, for his part, recommends gathering sentiment from many different sources.
Patience is also key.
“Don’t invest to get rich quickly; invest in things you believe will be successful in the long run,” Weiss says. “There’s a saying in the stock market, and from what I’ve seen it certainly translates to crypto: ‘Time in the market beats timing the market.'”
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Should You Buy Shiba Inu Coin? originally appeared on usnews.com
