Shiba Inu Drops 84%, Should You Buy When the Price Drops?

Shiba Inu (CRYPTO: SHIB) could not have performed better for investors a few years ago. From the beginning of 2021 to its all-time high at the end of October that year, this digital asset skyrocketed. There are certainly some very lucky speculators who accumulated a life-changing amount of wealth. However, the story has changed since then. While the cryptocurrency market as a whole remains stable despite the volatility, Shiba Inu still has much work to do to catch up to its previous golden age. As of May 20, this meme token is trading at $0.00001428, down 84% from its peak about three and a half years ago. Is it time to buy in while the price of Shiba Inu is down? I think investors should consider both sides of the argument for a better understanding. Hope for Quick Profits As of the time of writing this article, Shiba Inu has a market capitalization of 8.4 billion dollars. This makes it the 16th largest cryptocurrency on Earth. This value is higher than companies like Etsy and Peloton. Therefore, it is hard to argue that Shiba Inu does not have a strong community of supporters. These supporters, known as the "Shib Army", help to drive interest in the token online. Speculators understand that community can lead to various hype cycles. And if the time is right, there is a chance to achieve huge profits in a short time. Shiba Inu can be considered the "Dogecoin killer." This is because it is built to be compatible with the Ethereum network. This means that Shiba Inu has greater functionality compared to its dog-themed predecessor. Tokens can be used in decentralized exchanges to trade non-fungible tokens or in decentralized finance protocols. Theoretically, this increases utility. Moreover, the Shiba Inu developers are striving to enhance adoption with various features. Shibarium, a layer 2 scaling solution, has been introduced to accelerate transactions and reduce costs. A dedicated metaverse was also launched in December last year, allowing users to interact in the virtual world. This could generate some excitement for Shiba Inu. Add unnecessary risk to your portfolio According to the venture capital firm Electric Capital, Shiba Inu is not even in the top 100 cryptocurrencies when considering the number of developers actively working on it. This does not bode well for its future, especially if you believe, as I do, that the ultimate survival of a cryptocurrency depends on the level of real utility it can provide. This puts Shiba Inu at a significant disadvantage. Tokenomics also leaves many things to look forward to. Currently, there are 589 trillion Shiba Inu tokens in circulation. For example, this intentionally high supply is set in contrast to the scarcity that Bitcoin possesses. This makes the price of Shiba Inu difficult to increase steadily over time. There is a coin burning mechanism to reduce the supply. However, on May 19, only 49 million coins were burned. This will not significantly affect the supply in the near future, as it would take over 16,000 years to burn half of the remaining supply. The reality is that anyone can create a new token out of thin air, posing a major risk to Shiba Inu, which is competition. The cryptocurrency industry is still the latest type of digital asset available. Therefore, it is still characterized by unhealthy speculation among market participants. There is no shortage of tokens to stake in the hope of getting rich quickly. This increases the likelihood that people will eventually move away from Shiba Inu to switch to newly released shiny tokens. For long-term investors looking to own high-quality assets, there is really no reason to own Shiba Inu. The case for a price drop for the meme token is much more appealing than the bullish argument. Although the cryptocurrency is trading well compared to its peak, investors should steer clear of Shiba Inu.