Even for a cryptocurrency, Shiba Inu (CRYPTO:SHIB) created astonishing wealth in very little time. In 2021, its value skyrocketed nearly 42,000,000%, a pace the would have turned $2.50 into a million-dollar portfolio. However, since peaking in October, investors have sold the meme token hand over fist, and Shiba Inu has lost more than 75% of its value.
Of course, some crypto enthusiasts may see that pullback as an investment opportunity. But I urge you to exercise caution. There is no guarantee that Shiba Inu’s price will ever reach a new high. And just because it’s fallen significantly doesn’t mean it’s done falling. More importantly, many other cryptocurrencies look like far better investments.
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The case against Shiba Inu
Shiba Inu is an ERC-20 token on Ethereum‘s blockchain, which itself is the largest ecosystem of decentralized applications (dApps) and decentralized finance (DeFi) services. In other words, Shiba Inu doesn’t have its own blockchain, which means it will never support its own ecosystem of products and services. That limits its long-term potential, but it’s certainly not a deal breaker.
Several other ERC-20 tokens have clear value propositions. For instance, the LINK token powers Chainlink, a decentralized network of computers capable of bringing real-world data onto any blockchain. And USD Coin is a stablecoin tied to the price of the U.S. dollar, which makes it possible to participate in DeFi services without holding volatile cryptocurrencies. For instance, you can lend USD Coin to the Compound protocol right now and earn 2.13% APY — that’s significantly better than the 0.06% APY paid by the average savings account.
Unfortunately, Shiba Inu’s utility falls short of those standards. The token hasn’t been incorporated into popular DeFi protocols like Compound, nor does it offer any groundbreaking functionality of its own. Of course, advocates may point out that Shiba Inu does have its own decentralized exchange, ShibaSwap, and it is possible to stake SHIB tokens to earn rewards on the platform. That’s true, but the protocol keeps 66% of those rewards locked up for six months, and given the token’s volatility, those rewards might be worth far less than your original stake when you finally get control.
All things considered, Shiba Inu’s meteoric rise was fueled by social media hype and brilliant branding. Borrowing Dogecoin’s mascot was ingenious. But without a competitive edge, Shiba Inu’s popularity is likely to wane in the future. That’s why I think it’s time to sell.
The case for Fantom
The Fantom (CRYPTO:FTM) blockchain was designed to overcome the scalability problems that plague other smart contract platforms, especially Ethereum. In fact, the developer team believes Fantom is the fastest public blockchain in the crypto industry, and the innovation behind that speed is the Lachesis protocol.
Specifically, Lachesis is a proof of stake consensus mechanism that allows validator nodes (computers) to capture the time order of events on the blockchain. That means each validator can confirm transactions independently, without waiting for other validators to verify each event. As a result, Fantom has a phenomenal throughput. The platform can process thousands of transactions per second (TPS), and those transactions are finalized in approximately one second. By comparison, Ethereum currently handles about 14 TPS, and it requires over one minute to reach finality.
Why does that matter? As Ethereum’s ecosystem of dApps and DeFi services has seen greater adoption, network congestion has caused transaction speeds to slow and transaction fees to rise, making the platform less desirable. Put another way, Ethereum lacks scalability — but Fantom appears to have that problem solved.
As a result, the platform has generated significant interest among DeFi enthusiasts. In fact, Fantom is now the fourth-largest DeFi ecosystem, with $10.9 billion invested on its blockchain. Moreover, while Ethereum has seen the value of its DeFi ecosystem fall 22% in 2022, DeFi investments on Fantom have more than doubled since the beginning of the year. And given its value proposition — significantly faster speeds and cheaper fees — the platform is well positioned to take market share from Ethereum in the months and years ahead.
To that end, demand for the FTM coin should rise, because it’s used to pay fees on the network. And as demand rises, the cryptocurrency should become more valuable.
Image source: Getty Images.
The case for Bitcoin
Bitcoin (CRYPTO:BTC) has been around since 2009, and it may seem like old news to many crypto enthusiasts. But after all those years, Bitcoin has retained its position as the most valuable cryptocurrency. In fact, it still accounts for 41% of the value of the entire crypto market. And while it doesn’t offer functionality like Fantom, there is good reason to think its value will continue to rise.
According to a study from Fidelity, Bitcoin is the most popular cryptocurrency among institutional investors, a group that has over $100 trillion in assets under management. And those big money movers are increasingly interested in crypto. In fact, 71% now plan to invest in digital assets in the future, up from 59% last year, according to Fidelity. And as those institutional investors diversify into crypto, Bitcoin’s existing popularity should drive strong future demand, pushing its price higher over time.
In fact, investment bank JPMorgan has said Bitcoin could eventually reach $146,000, implying 290% upside. Even more compelling, popular fund manager Cathie Wood has said Bitcoin could reach $500,000 by 2026, implying over 1,200% upside.
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.
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