3 Reasons Shiba Inu Is Taking Off Today

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What happened

Among the top cryptocurrencies on watch for many retail investors, Shiba Inu (SHIB 2.61%) is once again going on a nice run. Today’s 24-hour move of 5.6% as of 3:30 p.m. ET brings the current year-to-date gain for SHIB up to nearly 14%. 

There are a number of reasons that cryptos, and meme tokens for that matter, are surging higher right now. These assets are widely viewed as high-beta ways to play surging asset prices.

We’ve seen the sensitivity many tokens have with respect to interest rates on full display in 2022. This year, expectations that interest rates could meet their terminal rate in the first half of the year before a pause (and then hopefully a pivot) are driving more-speculative assets off their lows. 

And Shiba Inu has seen increased interest from whales, with a $28.7 million transaction this month. Given the fact that a significant percentage of SHIB, like most cryptos, is held by a relatively small number of individuals, such actions can move the price of a given token in a big way. This will be a key factor many investors continue to watch.

Lastly, Shiba Inu’s metaverse launch, as well as its soon-to-be-launched Shibarium (which will burn tokens for every transaction on the network), improves this project’s allure from a tokenomics perspective.

So what

It’s clear that macro forces continue to be the primary driver of price action for most cryptos. Interest rates matter for valuations, and these higher-risk assets are similar in many respects to more-speculative equities, which are also seeing nice gains thus far this year. 

However, Shiba Inu also has some compelling community-related initiatives that investors appear to be discussing more broadly. As a meme token, the value of SHIB is really driven by how bullish (and large) Shiba Inu’s community is at a given point in time. The launch of a Shiba Inu-themed metaverse and potentially improved token dynamics could go a long way in convincing hodlers that this is a token poised for another massive rally.

Now what

With a valuation of more than $5 billion at the time of writing, Shiba Inu is no small crypto token anymore. Thus, it’s unlikely to go on another multimillion-percent run ever again, as that would simply put the valuation of this project into unfathomable territory. 

The reality is that there are plenty of companies worth a lot less than $5 billion with real cash flows and profits available to investors. Making the suggestion that Shiba Inu can skyrocket from here is one thing, but actually seeing those sorts of gains could remain unlikely, at least in the near term. 

Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.