Digital Assets
Is it Safe to Buy Shiba Inu (SHIB) After the Recent Crash?
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Shiba Inu surprised many after it made a major bullish rally in October. Despite the recent recession, the meme token's yearly gains stand as the largest crypto sector. However, many investors are worried about a massive correction.
When Shiba Inu reached an all-time high of $0.000084 in October, it became the only meme token that managed to beat Dogecoin and live up to the reputation of being the ‘DOGE killer.” At the time, it was one of the most traded tokens, and at one point, it became the 8th largest cryptocurrency by market capitalization.
After an over 50% correction, Shiba Inu ranks as the 13th largest cryptocurrency. The gains it made in October were mostly erased, but this has not prevented it from being one of the most popular meme tokens in the market.
However, while there is still a significant amount of trading volumes of around $1.8 billion, investors still fear whether Shiba Inu is still a safe investment.
Shiba Inu is consolidating
When Shiba Inu made a bullish rally in October and reached an ATH, many analysts predicted that the meme token would move towards a massive price correction in the following weeks because the buying pressure would be exhausted.
However, unlike many predicted, SHIB did not move towards a strong recession despite most traders being in the profit zone. The SHIB downtrend started after a whale address that had bought a substantial amount of SHIB tokens last year started moving some coins after making major profits.
From $0.000084, the token dropped to the level of $0.000042, and it has been holding these levels for quite some time, which could show that it is consolidating. Usually, after a long consolidation phase, the token makes another bullish rally, which could happen with SHIB.
However, even as it consolidates, it is important to remember that most SHIB holders are in profits, and they could be exhausted from holding the tokens for too long and trigger selling pressure. This could push the token towards lower levels, and a sharp downtrend could be formed.
Most of Shiba Inu tokens are held by whales
The other factor that has many investors worried about Shiba Inu is that most of the tokens are held by whale addresses. Whales are accounts that hold a large number of Shiba Inu tokens, and they can affect prices because if whales decide to sell, prices could come crashing down.
As mentioned earlier, the first SHIB downtrend after October bulls happened after a whale address moved some SHIB coins, creating panic among investors. Therefore, a movement of large tokens by these whale addresses could erase most, if not all, of the gains that SHIB has made during this last quarter of 2021.
On the other hand, whale accounts can be good for SHIB because they could help prevent regular price volatility. Currently, the SHIB whales could be why the prices are consolidating. However, holding these prices will require the whales to hold on to these tokens longer, which is not a certainty.
Therefore, if you invest in SHIB, watch out for the on-chain activity of the whale addresses to see if a major price correction is around the corner.
Shiba Inu's development team
The SHIB development team can be ranked as one of the best when it comes to development efforts. The team has already initiated several projects to give utility to the SHIB token.
One of the strategic developments of this team is the ShibaSwap. ShibaSwap is a decentralized finance (DeFi) protocol that aims to bring utility to the SHIB token. While the protocol operates through other tokens such as BONE and LEASH, it has created a solid presence in the market.
None of the other meme projects has fully ventured into the DeFi scape like Shiba Inu has done, making it one of the preferable meme tokens you can have in your investment portfolio.
Moreover, the ShibaSwap platform also contributes to the SHIB token's value. ShibaSwap allows users to stake SHIB tokens and earn rewards from them. By promising passive income, the platform ensures that fewer SHIB holders are tempted to sell because they can just stake their holdings and earn income from it.
The other top advancement that has been made by this team is the burning process. Meme tokens are usually cheap because there are many tokens in the market. For example, Shiba Inu has a supply of over a quadrillion tokens. During the early years of the coin, the team sent 50% of the entire supply to Vitalik Buterin, Ethereum's founder.
However, Buterin burned 90% of the entire tokens sent to him and donated the remaining 10% to a COVID fund in India. This led to a major uptrend in SHIB's prices, and it was a major turning point for the token.
The Shiba Inu network is currently running a similar burning process, but they are not burning many tokens as Buterin did. This means that while the supply is diminishing, it is doing so at a very slow rate, which means that the effects might only be left in the long term.
Shiba Inu is gaining adoption for payments
The other area where Shiba Inu is also making major gains is its use as a means of payment. Currently, SHIB ranks as the second most utilized meme token after Dogecoin.
Recently, Shiba Inu was chosen as one of the cryptocurrencies that would be accepted as a means of payment by AMC Entertainment. This was a major gain for the meme token, given a large number of users that the movie theatre chain has. AMC's CEO stated that SHIB would be adopted as a means of payment for online tickets.
The other notable adoption that SHIB saw was by Vegas Auto Gallery. This is a luxurious car dealer based in Las Vegas. The dealership announced that it would accept Shiba Inu for payments for its luxurious car collections.
If SHIB gains more endorsements from global brands and increases its utility on being used for payments, it would boost the token's demand and lead to a notable bullish rally.
Shiba Inu is facing stiff competition
The other factor that a trader also needs to consider is the competitive nature of meme tokens. When Dogecoin rallied at the beginning of the year, it made notable gains because there was no competition against it.
However, when Shiba Inu came into play, Dogecoin was overshadowed and left behind as SHIB made a strong bullish rally. Currently, Shiba Inu faces competition from Floki Inu, one of the newest but fastest-growing meme coins.
Floki Inu's popularity is growing by the day in the market because of the strong marketing efforts that its team has put forward. The token ran an ad on London's public transport system, and it is currently running an ad on Burj Khalifa during the busiest weekend in the Emirates.
Floki Inu is attracting attention globally because of its marketing efforts. Moreover, Floki Inu has a hyper-deflationary nature, more than anyone could say for Shiba Inu, with half a quadrillion tokens in circulation.
Conclusion
Shiba Inu has been making notable gains this year, and while it is currently undergoing a notable price correction, it is still attracting much attention from investors. However, the high volatility of meme tokens has many investors worried that SHIB could be headed towards major price dips.
To learn more visit our Investing in Shuba Inu guide.
