Cryptocurrency investors have seen huge returns in 2021. Bitcoin and Ethereum have led the pack in smashing through previous all-time highs to set new record prices. Other cryptocurrencies have seen even more dramatic price increases. Dogecoin began 2021 trading at fractions of a cent per coin. In May, Dogecoin soared to a new all-time high above 72 cents.
Amid the Dogecoin hype, a new cryptocurrency token was launched with a similar dog-inspired aesthetic. Shiba Inu coin is named for the iconic Shiba Inu dog which has been Dogecoin’s meme mascot since the Bitcoin-spoofing cryptocurrency was created in 2013.
Dogecoin hype reached fever pitch in the build-up to Elon Musk’s hosting of Saturday Night Live (SNL). Dogecoin holders were anticipating a likely mention of the cryptocurrency by Musk on the show. Musk did bring up Dogecoin in SNL’s “Weekend Update” sketch, but what he said did little to help Dogecoin fans achieve their goal of pushing the cryptocurrency on to a $1 valuation.
The SNL sketch saw the regular cast members ask Musk a simple question: “What is Dogecoin?” Musk responded with several highly technical explanations of the cryptocurrency before finally agreeing with their assessment that Dogecoin is “a hustle”. Dogecoin’s price dramatically tracked the sentiment surrounding Musk’s appearance, hitting a high of 72 cents before dropping to a low of 47 cents while the Tesla founder was live on air.
As Dogecoin was capturing unprecedented attention, Shiba Inu coin suddenly shot up the cryptocurrency rankings to reach a market cap of more than $14.3 billion. Over the next two days, Shibu Inu coin’s price dropped by more than 50%. So what caused this dramatic multi-billion dollar rise and fall?
What is Shiba Inu coin?
Shiba Inu coin was created in August 2020. Going by the market tracker SHIB, the coin spent the first few months of its existence as a niche cryptocurrency known only to the most dedicated new coin hunters. SHIB fully embraced the meme aspect of Dogecoin and the large online community this helped to create. Cryptocurrencies from Bitcoin onward have been launched with a whitepaper detailing technical aspects and future development plans. Shibu Inu coin was launched by pseudonymous creator Ryoshi with a “woofpaper” which talked of building a decentralized army of developers and a new cryptocurrency ecosystem centered on the ShibSwap exchange.
Dogecoin’s incredible price performance in 2021 has brought lots of interest to obscure meme coins with the potential to be the next big thing. SHIB’s growth was largely fueled by Chinese cryptocurrency investors with most of the coin’s trading volume being recorded on the Huobi exchange. SHIB has also been listed on Binance.
The returns Shiba Inu coin provided outstripped even those of Dogecoin. As SHIB mania reached its peak, the meme coin saw a 24-hour trading volume above $14 billion. The price rose by 1,720% in the space of a week, 2,428% across two weeks, and more than 36,060% over the course of one month.
SHIB Sent to the Dog House
Shiba Inu’s drop-off was just as swift. Crypto traders lost more than $46.5 million in one day betting on SHIB futures across exchanges such as Binance and OKEx. One of the most upvoted posts on the r/CryptoCurrency subreddit warned that another meme coin claiming to have been created by SHIB’s developers was a scam. The new Shikokuaido coin soared on the meme coin hype then saw 95% wiped off its value almost immediately.
Shiba Inu coin’s creators sought to prove their coin wasn’t a similar pump-and-dump scheme by donating 50% of all tokens to the wallet of Ethereum creator Vitalik Buterin. However, Buterin wasn’t keen on helping SHIB gain legitimacy through his endorsement. Buterin sold off all the SHIB coins sent to him then donated the proceeds to funds aiming to help fight the coronavirus crisis in India. SHIB’s value collapsed by more than 50% in the wake of Buterin’s rejection of the coin.
What Next for Shiba Inu Coin?
Dogecoin holders’ hopes of hitting $1 were dealt a big blow by Elon Musk’s appearance on SNL. Musk’s pro-crypto tweets have been a big driver of cryptocurrency hype over the past year. Tesla’s purchase of $1.5 billion worth of bitcoin in February helped push Bitcoin’s value from around $38,000 to highs above $61,000 by mid-March.
But Musk has caused further consternation among crypto traders with a tweet sent on May 12 saying that Tesla would no longer accept bitcoin payments for its vehicles. Musk’s tweet blamed the decision on the environmental impact of bitcoin mining.
Shiba Inu coin soared on the hype surrounding the meteoric rise of Dogecoin. SHIB’s hopes of being the so-called “Dogecoin killer” look increasingly remote now that newcomers to the crypto scene are learning that prices can fall just as dramatically as they rise.