2 Reasons to Sell Shiba Inu Now

Shiba Inu (CRYPTO:SHIB) went viral last year, capturing the attention of the finance world by creating tremendous wealth in a very short period of time. In fact, since hitting a low in November 2020, its price has skyrocketed 47,500,000%, and it currently ranks as the 14th most valuable cryptocurrency. Even more impressive, that number accounts for a prolonged sell-off that started in October 2021, erasing 69% of its value.

Dazzled by those numbers, many investors are hoping for an encore in 2022. But that type of thinking is dangerous. Past returns are never a guarantee of future performance, and even though Shiba Inu has fallen a long way from its high, things could still get worse. With that in mind, here are two reasons to consider selling this cryptocurrency.

Image source: Getty Images.

1. Shiba Inu lacks a competitive edge

Shiba Inu is an ERC-20 token, a currency created by a smart contract on the Ethereum blockchain. In other words, Shiba Inu doesn’t have its own blockchain, which means it can’t support its own ecosystem of decentralized applications (dApps) and decentralized finance (DeFi) products. That being said, plenty of ERC-20 tokens have become important players in the crypto economy, especially Chainlink and Tether.

On the bright side, all ERC-20 tokens are compatible with Ethereum’s ecosystem of dApps and DeFi services. That means Shiba Inu could be incorporated into popular interest-paying lending protocols like Aave and decentralized exchanges like Uniswap, as well as applications in other DeFi categories, including options protocols and insurance marketplaces. However, those integrations have so far failed to materialize, and I doubt they ever will — simply because Shiba Inu lacks a competitive advantage.

The token’s value is due entirely to brilliant branding (i.e., it takes its name from Dogecoin‘s mascot) and relentless social media marketing campaigns urging investors to buy and hold. Together, those qualities sparked Shiba Inu’s meteoric rise in 2021, but beyond its popularity, there’s nothing special about this cryptocurrency. And unless that changes, its price will almost certainly continue to fall over time.

2. Shiba Inu ownership is highly concentrated

According to CoinMarketCap.com, over 1.1 million crypto addresses currently hold Shiba Inu, but the top 100 addresses account for 81% of all tokens. That’s an incredible amount of wealth concentrated in the hands of very few people. But the problem actually gets worse.

The top 10 addresses control roughly 65% of all circulating tokens. At the time of this writing, Shiba Inu’s market value is $14.7 billion, meaning the top 10 accounts are worth $9.6 billion. If just a few of those token holders decide to cash out — an occurrence that seems increasingly likely as the price continues to fall — Shiba Inu’s value could implode.

Simply put, the token lacks utility and is heavily concentrated in very few accounts, both of which create substantial risk for investors. That’s why you should consider selling this cryptocurrency. After all, there are thousands of other crypto assets out there, and many have far more potential.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

This news is republished from another source. You can check the original article here

Be the first to comment

Leave a Reply

Your email address will not be published.