Cryptocurrency has officially gone to the dogs.
The recent frenzy of trading on a digital token called the Shiba Inu – commonly billed as a ‘meme’ or joke coin – has made dog-themed cryptocurrency the top ten most valuable digital assets by market value, reaching $ 40 billion and surpassing its apparent cousin and inspiration, Dogecoin.
Shiba was up 10% as of noon Monday and doubled in value last week. Most of that gain came in a wave of trading last Wednesday, when it gained a whopping 66%.
Even with its recent meteoric rise – it’s increased by around 900% in the last month – each Shiba coin costs only a tiny fraction of a cent. If you bought Shiba for $ 1,000 in late September, your 20 million coins would now be worth around $ 9,000.
Like most cryptocurrencies, Shiba is not commonly used for commercial transactions and is considered by most experts and investors to be a high risk speculative bet due to the broader volatility of the crypto market. Experts warn that investors should be careful when investing money in something with anonymous leadership that appears to have little functional use.
Lee Reiners, an outspoken crypto skeptic, teaches fintech and cryptocurrency courses at Duke University School of Law. Reiners said he wasn’t surprised by Shiba’s recent spike.
“This is what happens when you have massive speculation in assets with no intrinsic value,” Reiners said.
Investors might think this story sounds familiar to them. Bitcoin has doubled in value twice this year – with a rapid drop in between – and is now selling for over $ 60,000 per coin. Among stocks, GameStop saw a rise that rivals that of Shiba, from around $ 17 per share in early January to $ 483 later in the month. Lately, it’s been trading regularly around $ 180.
Although Shiba is the current white-hot cryptocurrency, you cannot yet trade it through more traditional brokers. A petition with more than 450,000 signatures on Change.org is pushing for the Robinhood mobile trading app to start authorizing Shiba transactions. Robinhood currently allows trading in Dogecoin and other cryptocurrencies. Its CEO Vladimir Tenev told investors last week that the company “will carefully assess whether we can add new parts in a way that is safe for customers and complies with regulatory requirements.”
Stricter regulation of the crypto markets seems inevitable, but it’s unclear when this could happen. United States Securities and Exchange Commission Chairman Gary Gensler said in August that the crypto world does not have enough investor protection and compared it to the “Wild West.”
It is not clear whether this lack of regulation is behind the recent spikes in Shiba and other digital assets. What seems obvious though, is that retail investors – the little guys – are leading the way.
Kyle Waters, research analyst at blockchain data and analytics firm Coin Metrics, said Shiba’s median trade size on this busy Wednesday was $ 115. It is “strongly suggestive” that the typical Shiba trader on Coinbase is a small retail trader, Water said.
The rise of Shiba is similar to the rise of Dogecoin in the spring, when it caught fire and went from around 5 cents to 57 cents between April 7 and May 7.
Like many other cryptocurrencies, Shiba is shrouded in mystery. According to his white paper – or “Woof Paper”, in this case – the token was launched in 2020 by an anonymous person or group named “Ryoshi”. The article, which describes how Shiba and his offspring works, is also peppered with rising but vague platitudes about community, freedom, revolution, and the destruction of traditional paradigms.
Someone with limited knowledge of blockchain technology and the vernacular would have a hard time deciphering much of the technical wording in the white paper.
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