Crypto Investor? Here’s How Shiba Inu Could Hit $1

Shiba Inu (SHIB -3.25%) has become a symbol for life-changing wealth. Fueled by brilliant branding and viral marketing, the meme token saw its value increase over 42,000,000% in 2021. At that pace, if you had invested $5 on New Years’ Day 2021, you would have been a multimillionaire by Christmas. Unfortunately, the price has since fallen 75% from its high.

Despite that setback, many members of the Shiba Inu community remain bullish. Some analysts have even hit the meme token with price targets exceeding $1. Those are long odds to say the least, considering the price now is about $0.0000224, but it is possible for Shiba Inu to hit that mark.

Here’s what it would take.

The scaling solution

Shiba Inu is an ERC-20 token, a type of smart contract built on the Ethereum blockchain. For that reason, transactions within the Shiba Inu ecosystem are subject to the same exorbitant fees as other transactions on the Ethereum network. For context, the average fee currently sits at $14, but it peaked near $70 last year. That’s where Shibarium will make a difference.

Shibarium is a layer-2 scaling solution that will move Shiba Inu transactions to another platform, accelerating throughput and reducing fees. The launch has not been finalized, but it could take place as early as mid-2022. That has big implications for other Shiba Inu projects, including ShibaSwap 2.0 and the Shiba Inu metaverse.

Other projects in the pipeline

The Shiba Inu metaverse will allow users to buy parcels of digital land, earn passive income, and build their own projects in a Shiba Inu-themed virtual world. Similarly, ShibaSwap 2.0 is an upgraded version of the ShibaSwap exchange, a decentralized finance (DeFi) platform that allows traders to swap tokens and earn rewards through staking.

Those projects have Shiba Inu enthusiasts buzzing. Both could create demand for the meme token, pushing its price higher because they feature burn mechanisms designed to reduce the supply of Shiba Inu. For instance, metaverse property owners can rename their plots of land by burning tokens. Likewise, the developer community is working on a burn portal that will integrate with ShibaSwap 2.0. Details are still lacking, but the burn portal will likely impose a transaction fee across the decentralized exchange, and the funds collected from that fee will be sent to a dead wallet, effectively destroying them.

Image source: Getty Images.

The $1 price target

The circulating supply of Shiba Inu currently sits at 549 trillion tokens. If each token were worth $1, Shiba Inu would have a market cap of $549 trillion — that’s six times more than the gross domestic product of every country on the planet combined. The only way Shiba Inu will ever reach $1 is if a significant portion of the currency is destroyed. To understand just how many tokens need to be burned, let’s look at two hypothetical scenarios.

Scenario 1: Projects like Shibarium, Shiba Swap 2.0, and the Shiba Inu metaverse generate so much excitement that the meme token hits a market cap of $2 trillion. For context, that would make Shiba Inu worth more than Bitcoin on its best day, and it would represent a 150-fold return from its current price. If that happens, each token would be worth $0.00363, which is still well below $1. To make up the difference, 547 trillion tokens (99.6% of the total supply) would need to be burned.

Scenario 2: Projects like Shibarium, ShibaSwap 2.0, and the Shiba Inu metaverse generate no excitement whatsoever and the meme token maintains its current market cap of $13.3 billion. To reach a price of $1 per token, 548.99 trillion tokens (99.998% of the circulating supply) would need to be burned.

Here’s the bottom line: Shiba Inu could reach $1 if burn projects destroy the vast majority of circulating tokens, but there is still a catch. If everyone contributes the same number of tokens to burn projects, no one will actually make any money. The situation is analogous to a reverse stock split, which has no impact on an investor’s stake in the business. In other words, if your investment thesis is built around burn projects, you are effectively betting that other people will destroy more tokens than you. But at some point, everyone will come to the same conclusion and people will simply stop engaging with products that burn tokens. For that reason, I doubt Shiba Inu will ever reach the $1 mark. More importantly, I think there are better cryptocurrencies to buy and hold.

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