#shibainucoin
Meme Cryptocurrency Shiba Inu Is Down 85%. Should You Buy the Dip, or Run for the Hills?
A frenzy swept the financial markets during 2020 and 2021, as global governments poured trillions of dollars' worth of stimulus into their economies to counteract the effects of the COVID-19 pandemic. Interest rates also plummeted to historic lows, which forced investors to take more risks in the hunt for a return on their money, and it led to wild swings in everything from stocks to cryptocurrencies.
Shiba Inu (SHIB 2.06%) made a name for itself in 2021 because it ended the year with an eye-popping gain of 45,278,000%, which would have been enough to turn a perfectly timed investment of $3 into $1 million. It was one of the best annual returns in the history of the financial markets, and since the meme token has no utility in the real world, it was driven entirely by speculation.
Unfortunately, speculative frenzies never last, and Shiba Inu has since plunged by 85% from its record high. But positive sentiment is creeping back into the crypto markets this year, so should investors buy the dip, or run for the hills?
Shiba Inu's upside catalysts are limited
Shiba Inu's main problem is a lack of adoption. For a cryptocurrency to rise over the long term, it must be considered as a legitimate store of value among investors (like Bitcoin), or it needs a true use case to drive demand.
Since Shiba Inu is down 85% from its record high, investors clearly have little faith in its ability to hold value. And according to crypto directory Cryptwerk, just 1,072 businesses accept it as payment for goods and services in the entire world, and if consumers can't spend the token at their favorite stores, they have no reason to own it.
Shiba Inu developers launched a Layer-2 blockchain solution called Shibarium in 2023, which eliminated some of the clunkiness and costs from the legacy Ethereum network upon which the meme token is built.