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 soared. Certainly, there are some very lucky speculators who have accumulated life-changing wealth.

However, the story has been different since then. While the cryptocurrency market as a whole remains stable despite volatility, Shiba Inu still has a long way to go to catch up to its previous golden era.

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 to gain a better understanding.

Hope for Quick Profits

As of the time of writing, Shiba Inu has a market capitalization of $8.4 billion. This makes it the 16th largest cryptocurrency on Earth. This is a higher value 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 drive interest in the token online.

Speculators understand that the community can lead to many different hype cycles. And if the timing is right, there is a chance to achieve massive profits in a short period.

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.

The token can be used in decentralized exchanges, to trade non-fungible tokens, or in decentralized financial protocols. Theoretically, this increases utility.

Furthermore, Shiba Inu developers are trying to boost adoption with various features. Shibarium, a layer 2 scaling solution, has been introduced to speed up transactions and reduce costs.

A dedicated metaverse was also launched last December, allowing users to interact in a virtual world. This could generate some excitement for Shiba Inu.

Add Unnecessary Risk to Your Investment Portfolio

According to venture capital firm Electric Capital, Shiba Inu doesn't even make the list of 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, like 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 much to be desired. Currently, there are 589 trillion Shiba Inu tokens in circulation. For example, this deliberately high supply is the opposite setup to the scarcity that Bitcoin possesses. This makes it difficult for the price of Shiba Inu to increase steadily over time.

There is a coin-burning mechanism to reduce supply. However, on May 19, only 49 million coins were burned. This will not significantly affect the supply in the near term, as it would take over 16,000 years to burn half of the remaining supply.

The fact that anyone can create a new token out of thin air poses a primary risk to Shiba Inu, which is competition. The cryptocurrency industry remains the newest asset class available.

Thus, it is still characterized by unhealthy speculation among market participants. There is no shortage of tokens to bet on in hopes of quick riches. This increases the likelihood that people will eventually move away from Shiba Inu to shiny new tokens.

For long-term investors looking to own quality assets, there really is no reason to own Shiba Inu. The case for a price drop for the meme token is much more compelling than the bullish argument. Although cryptocurrency is trading well compared to its peak, investors should steer clear of Shiba Inu.