The digital currency Shiba Inu (SHIB-USD) has risen from obscurity (or meme status, depending on who you ask) to become the hottest cryptocurrency trade.
Wild stories have already emerged of small investors making a fortune on the dog-like cryptocurrency. For starters, Shiba Inu should not be confused with Dogecoin (DOGE-USD) – another dog-faced digital currency. Coincidentally, Doge also started his life as a joke of sorts, on his way to becoming one of the most popular trades in the cryptocurrency world.
With a new coin based on the highly successful Netflix series “Squid Game” appearing, the explosive price action of Shiba Inu has sparked debate over which of these emerging coins are legitimate investments, and which are scams. The answer is likely to resonate across the cryptocurrency market which is increasingly popular with players big and small alike.
According to Bank of America data that tracks cryptocurrency trends on social media, Reddit/Twitter premium mentions put Shiba Inu and Dogecoin in the top 5 for October with the largest monthly change in signals.
However, not everyone was on board.
“I’d rather stay away from any of these things,” Jeff Gulberg, crypto investor and CEO of social analytics firm, Social Forensics, told Yahoo Finance in an interview.
Golberg, who got into the crypto space in 2015, wasn’t as excited about Shiba Inu or Dogecoin as other retail buyers. “I am interested in cryptocurrencies for the long term,” he said.
On the other hand, Golberg suggested that these “meme coins” serve as a way to attract more people who are interested in cryptocurrency, because they are fun and tempting.
However, the flip side of escalating trade like Shiba could easily lead to disaster. “A lot of people are going to burn out and that may leave them with a bitter taste for cryptocurrency,” Gulberg added.
“I didn’t buy much”
Currently the value of a Shiba Inu is equal to a fraction of a cent, 5 decimal places of one dollar, (0.00007336 USD to be exact). This makes the token look like a small stock except for a cryptocurrency — and SHIB carries fewer regulatory protection barriers.
The coin is very cheap because the supply is very large. Unlike Bitcoin (BTC-USD) and Ethereum (ETH-USD) which rely on scarcity at different levels as a driver of value, compared to SHIB’s coin supply is very large and seems almost limitless – around 400 trillion. For reference, the total Bitcoin supply is set at 21 million.
This past July, 39-year-old Joel Gilinsky dipped his toes into the burgeoning Shiba Inu business.
“I didn’t buy much,” Jelinsky said, referring to the 10 million Shiba coins he bought from crypto exchange Bitmart. Still, the investment has paid off over the past three months, although he admits there isn’t much long-term commitment on his part.
You just watch something explode and think, “Stop, that’s possible.” It’s fun to watchMatt Kohrs, Cryptocurrency Trader
“I have tripled my investment now and it can go up or down,” Jelinsky said, acknowledging that he doesn’t know anything about the SHIB team and/or its growing ecosystem of products.
He doesn’t describe himself as a “typical Wall Street guy”, preferring instead to watch Youtube videos to try and track down the next “hot” cryptocurrency that might rise in value for some reason. According to Jelinsky, he’s looking for “high risk, high reward” opportunities where he can throw in a few hundred dollars and see what happens.
Matt Kohrs, a stock and cryptocurrency YouTuber with a large following, is a massive owner of Shiba Inu. He pointed to an anonymous crypto wallet on the Ethereum blockchain (ETH-USD), whose holdings at SHIB have risen from $8,000 to $4.7 billion in just over a year.
And he admitted that part of what he believes drove him and the others was the “potential for such amazing financial gains”.
As of today, he is up over 1,000% from his initial investment, which means $200 of SHIB is now equal to $2,000. On Wednesday, he tried to buy an additional $10,000 of SHIB as its price rose rapidly, but he tried two platforms, but to no avail.
“It was hanging for hours and hours and hours before it finally got filled up,” Cohrs said on Coinbase. Sometimes, Coinbase, Robin Hood (HOOD) and even the New York Stock Exchange stop trading orders during times of increased volatility. As for why he struggled to make ends meet, he said those exchanges may have “not been expecting this kind of scale”.
Currently, Kohrs’ bet of $10,000 is “a little underwater,” which means he hasn’t even broken. But he hopes the “buy on dip” maneuver will yield profits…in the end.
“One of the main things I have learned this calendar year is the strength of the community. There is a good reason why AMC (AMC) is trading at a higher value than what typical fundamental analysis estimates, just like with GameStop (GME) I think there is a lot of added value from Ridiculously huge community support.”
Kohrs also shared a technical argument as to why SHIB might be profitable for him at some point, there is talk in the SHIB community of “burning coins”.
Like share buybacks in the stock market, eliminating an oversupply of cryptocurrencies, even if it is an astronomically large supply, can improve the value of digital assets over time. After all, as Kohrs points out, while SHIBs are currently hundreds of trillions wide, they started at one quadrillion.
As with the hunt for short-selling high-end stocks for an opportunity to instigate a short squeeze, Kohrs and others point to a significant overlap in investor communities, between the so-called “SHIB Army” and the Reddit retail crowd calling themselves “monkeys.”
“It’s not the same token representation as AMC or GME,” Cohrs told Yahoo Finance.
“This is just another head-turning thing, in the same way that GameStop turned people’s heads back in January before it became a battle for market fairness and transparency,” he explained. “You just watch something explode and you think, ‘Stop, that’s possible.’ It’s fun to watch.”
David Hollerith covers Yahoo Finance’s cryptocurrency. follow him Tweet embed.
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