Shiba Coin Investing: Everything You Need to Know
By now, most people are familiar with Dogecoin. Dogecoin is a cryptocurrency that started as a joke but actually gained mainstream popularity. Now, it’s one of the largest cryptocurrencies in the world with a market cap of about $18 billion. However, fewer people are familiar with Dogecoin’s cousin: Shiba Inu Coin (SHIB). Shiba coin investing is based on the friendly face of a Shiba Inu.
Shiba coin has risen an astounding 1,500,000% since it was created, including 21,700% in the past year alone. Despite this, it still costs just a fraction of a cent. With this in mind, let’s take a look at Shiba coin investing and whether or not it’s right for you.
What is Shiba Coin Investing?
According to Coinbase, Shiba Coin (SHIB) is a token that aspires to be an Ethereum-based alternative to Dogecoin. It has set itself apart from other coins by creating an absolutely massive supply. Shiba coin started with an initial supply of one trillion. Now, its total supply is about four quadrillion tokens. For reference, there will only ever be 21 million Bitcoins in existence.
This massive supply helps to keep the price of Shiba coin incredibly low. This way, it’s easy for everyday investors to buy up large amounts of Shiba coin.
Shiba coin also has an incredibly fast burn rate. A cryptocurrency’s burn rate is the process by which users remove tokens from circulation. Users can do this by bulk transferring tokens to a different wallet that is only designed to receive coins. Once the coins are in this new wallet, they cannot be used and are removed from the network. This lowers the total supply of coins in circulation and can help boost the price.
According to Bitcoin.com, Shiba Inu’s daily burn rate is approximately 26,000%. Some investors believe that this high burn rate could cause Shiba’s price to rise. Assuming demand stays the same, a decreasing supply will naturally lead to a higher price.
In addition to being a coin, Shiba also has an ecosystem. This ecosystem includes an NFT art incubator and the development of a decentralized exchange called Shibaswap. According to Shibatoken.com, Shiba currently has 585,000 community members.
Should You Buy Shiba Coin?
Shiba coin investing is not for the faint of heart. If you look at the five-year history of the coin, it can seem like a no-brainer. After all, Shiba coin is up 21,700% in the past year, right? If you had invested just $100 this time last year then you’d be sitting on $21,700 right now! What were you thinking?!
However, situations like these are always 20/20 in hindsight. In 2021, you had no idea whether Shiba coin was going to go up, down, or in circles. Just like, as you read this article, you have no idea how Shiba coin is going to act today, tomorrow or a year from now.
There’s no other way to say it: Shiba coin investing is essentially just a gamble. Unless you are acting with a critical piece of information that others don’t know, it’s no different than playing roulette.
But, does that mean you should never buy Shiba Inu? Not necessarily!
Are You Comfortable With a Gamble?
Just because Shiba Inu investing is a gamble, doesn’t mean that you should never buy it. Many investors stake a small percentage of their portfolios towards high-risk bets. Essentially, they spend just a little bit of money on assets that have the potential for outsized returns.
Before doing this, you’ll need to ask yourself what your risk tolerance is. Your risk tolerance is basically a way to determine how much financial risk you are willing to take with your investments. An investor with a high-risk tolerance is willing to take a lot of risks in order to potentially get better results. On the other hand, an investor with a low risk tolerance would rather protect their money, even if it means earning a lower return.
Before buying Shiba Inu, it’s important to figure out where you land on this spectrum.
More often than not, you’ll land somewhere in the middle. You’re not going to invest your life savings into Shiba Inu. But you also don’t want to miss out in case it goes on an incredible fun.
A good rule of thumb is to invest one-to-five percent of your portfolio into high-risk bets like Shiba coin. For example:
- If you have $1,000 to invest then shouldn’t invest more than $50 into Shiba.
- If you have $10,000 to invest then shouldn’t invest more than $500 into Shiba.
- And if you have $100,000 to invest then shouldn’t invest more than $5,000 into Shiba.
But again, it all depends on your preference. Many investors invest around five percent of their portfolio into cryptocurrencies but still don’t want to touch Shiba Inu. This is because there are plenty of cryptocurrencies with much higher potential.
Are There Other Options?
Remember that Shiba coin and Dogecoin are mainly just joke cryptos. However, there are plenty of cryptocurrencies out there that are backing legitimate projects. For example, ApeCoin actually has billions in funding, an experienced team behind it, and a somewhat-defined future of the project. Shiba Inu has none of this. This is why you should only invest in Shiba coin with money that you’re comfortable losing!
I hope that you’ve found this article valuable when it comes to learning everything you need to know about Shiba coin. Please remember that I’m not a financial advisor and am just offering my own research and commentary. As usual, please base all investment decisions on your own due diligence.