How do you handicap the next move for Shiba Inu (CCC:SHIB-USD)? Simple, you don’t. SHIB stock doesn’t have a reason to be, yet.
With high-utility cryptos, there’s at least some sort of fundamental analysis that can be performed, similar to how it works with stocks. But with “memecoins” like this one it’s purely a bet on market psychology.
Actually, calling it a “bet on market psychology” may be giving it too much credit. Gambling analogies are widely used in commentary about this crypto, along with the one that started the “jokecoin” trend, Dogecoin (CCC:DOGE-USD).
There are many forms of gambling. Some games considered gambling are more skill-based, like poker. Horse racing and sports betting are gambling activities where a degree of skill can either give you an edge (albeit it’s easier said than done), but they are also governed mostly by chance.
Unfortunately, speculating in SHIB stock isn’t gambling in the way playing poker, or even betting on horses/sporting events is “gambling.”
Instead, it’s more akin to picking the next number on a roulette wheel—purely based on luck.
With this, there’s no need to kick yourself for not buying Shiba ahead of it rallying more than 100%. There’s also no reason to chase it now, in anticipation of it “dropping more zeroes” and making its way to a penny (which would be 767.4x where it trades today).
SHIB Stock: Predicting The Unpredictable
So, what was it that sent SHIB stock soaring recently? Frankly, it’s hard to tell. For starters, this has been a good week overall for cryptocurrencies. Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD) also are up a few percentage points.
Crypto commentators online have speculated as to the reason for the surge in Shiba Inu prices. One article, from CryptoPotato, chalks it up to news of a whale purchasing $44 million worth of the dog-themed token. Other articles, like one from CoinGape, cites a tweet from Elon Musk as the catalyst.
Whether it’s due to the whale purchase, Musk’s tweeting, or something else, the takeaway is clear: this jokecoin only makes parabolic moves on a whim.
Something small potatoes sparks it, yet it’s the madness of the trading crowd that creates the parabolic move. It’s highly profitable for those who managed to get in before big moves happen.
However, when it comes to predicting the next time it happens, it’s a game of predicting the unpredictable, as with the roulette analogy I used above. That’s what makes buying it now, in the hopes that it continues its rally, nothing more than a gamble.
Of course, getting back to its high offers a much larger payout than betting on red or black, odd or even on a roulette wheel.
Hitting the 1 cent mark would result in a gain leaps-and-bounds above hitting the exact number on our hypothetical roulette wheel. Nevertheless, unless you are just looking for “action,” throwing money into this still isn’t that worthwhile of an endeavor.
What About the Coin-Burning Catalyst?
Until it really starts making progress becoming a high-utility coin, the above-mentioned “it’s a gamble” thesis stays in place for Shiba Inu.
That said, I will concede there may be something that could play out, that reduces my argument that price moves for the “jokecoin” are random.
That would be the positive impact from what’s known as coin burning.
Coin burning is when a crypto’s developers remove coins/tokens from circulation. It’s sort of like the crypto world’s equivalent to a stock buyback.
As my InvestorPlace colleague David Moadel recently argued, Shiba’s developers have burned tokens in the past. Most notably, when they gave 50% of its initial outstanding supply to Ethereum co-founder Vitalik Buterin, who in turn, burned this “gift.”
Another 50% burn may not be in the works, but per Moadel’s view, this crypto’s developers could continue to remove tokens from circulation. This gradual reduction of supply could help SHIB prices slowly move higher. In turn, this may give it value, as a hedge against inflation.
This factor may signal there’s more than unpredictable spurts of trader mania that could help send Shiba Inu higher. What it isn’t though, is something that signals further mega moves are likely.
Predicting the next “to the moon move” is a straight-up gamble, as I’ve said before.
This Latest Rally May Not Last, Be Careful
The latest price move for SHIB may be driving more interest from investors/traders who have stayed away from it since the bursting of the crypto bubble back last spring. But as the latest mania surrounding it does not appear sustainable, your best move here is to be careful.
Yes, there’s a chance you can chase Shiba Inu now, and see it double once again. If that happens? Consider it good luck, and not the product of good prognostication.
InvestorPlace does not regularly publish commentary about cryptocurrencies that have a market capitalization less than $100 million or trade with volume less than $100,000 each day. That’s because these “penny cryptos” are frequently the playground for scam artists and market manipulators. When we do publish commentary on a low-volume crypto that may be affected by our commentary, we ask that InvestorPlace.com’s writers disclose this fact and warn readers of the risks. Read More: How to Avoid Popular Cryptocurrency Scams
On the date of publication, Thomas Niel held long positions in Bitcoin and Ethereum. He did not have (either directly or indirectly) any positions in any other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.