The capital markets have gotten off to a strong start so far this year. About halfway through 2024, the S&P 500 has risen 15% while the Nasdaq Composite has gained 18%.
Investors may be keen to learn that it's not just stocks that are gaining steam this year. Alternatives such as cryptocurrencies have also performed well through the first six months of the year.
One of the more notable high-flying cryptocurrencies is Shiba Inu(CRYPTO: SHIB), which gained 64% as of the market close on April 21.
Given Shiba Inu's impressive performance so far this year, could the token reach a target of $0.01 by year-end?
Let's analyze Shiba Inu's ascent, and determine if now is a lucrative opportunity to get in on the action.
What is Shiba Inu?
Shiba Inu is one of the most popular cryptocurrencies. However, unlike Bitcoin or Ethereum, Shiba Inu has very little real-world utility.
Instead, its popularity mostly stems from social media influencers.
Image source: Getty Images.
Can Shiba Inu reach $0.01 in 2024?
Although there is not a definitive number that constitutes whether a company has a high or low share count, some stocks can experience more pronounced and volatile price movements compared to peers because of relatively fewer shares outstanding.
This dynamic is explained through the laws of supply and demand. In simple terms, a stock that has tens of billions of shares outstanding generally requires more buying activity to push it higher than a stock that has many fewer shares available for trading.
Shiba Inu currently has a supply of 589 trillion tokens. By comparison, Bitcoin has roughly 19.7 million coins in circulation. Given Bitcoin's relative scarcity compared to other cryptocurrencies, it doesn't take an enormous amount of buying or selling to result in a dramatic movement.
On the contrary, considering Shiba Inu has hundreds of trillions of tokens, it's very difficult for it to experience meaningful price movements.
In early January, Shiba Inu's price was $0.000011. Now, even with a 64% gain, the token only trades for a paltry $0.000018.
Clearly, Shiba Inu isn't worth anywhere near $0.01 -- and I highly doubt it will reach that milestone by year-end -- if ever.
For Shiba Inu to reach $0.01, there would need to be an enormous amount of buying. Moreover, these investors would have to hold on to their positions and not sell when prices rose still more.
This level of buying probably would mean that institutional investors would need to get involved. Considering cryptocurrency is widely considered to be more popular among retail investors as opposed to Wall Street funds, I don't think it's reasonable to forecast billions of dollars of new capital being allocated to Shiba Inu anytime soon.
Should you invest in Shiba Inu right now?
I see Shiba Inu token as the equivalent of a penny stock. Very much like GameStop, AMC, and other meme stocks, there isn't any real fundamental rhyme or reason influencing Shiba Inu.
Depending on the day and the current sentiment of a relatively small cohort of people on the internet, Shiba Inu token may experience some buying or selling activity. But outside of that, there isn't any concrete evidence that smart money is betting on the token as a long-term investment.
While it's easy to think that Shiba Inu could be a lucrative opportunity given its cheap price, I'd caution against that idea. If you're interested in alternative investments, there are much safer options than Shiba Inu.
Furthermore, if you are interested in the cryptocurrency market in general, I'd encourage you to consider more established opportunities such as Bitcoin. Althoiugh crypto at large is still generally risky compared to traditional vehicles such as stocks, bonds, or index funds, Bitcoin and some other major cryptocurrencies have at least found some utility in the real world and are garnering more nods of approval from Wall Street.
Should you invest $1,000 in Shiba Inu right now?
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Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
