The Shiba Inu price has struggled lately. Two weeks after it spiked to a high of $0.00040, the ‘currency’ is trading at $0.0000093. This price is 76% below its all-time high and its market capitalization has dropped to more than $3 billion. It has dropped from the top-15 of the biggest digital currencies in the world to 32, according to CoinMarketCap.
Why Shiba Inu price jumped
For starters, Shiba Inu is a relatively new blockchain project that was partially inspired by the success of Dogecoin (DOGE). According to its woofpaper, Shiba Inu is an “experiment in decentralized spontaneous community building.” It adds:
“We believe through the power of collective decentralization we can build something stronger than acentralized team ever could create. A community-run token is nothing without the united individuals who give it purpose.”
There are four primary reasons why the Shiba Inu price jumped so much. First, at the time, everyone was talking about Dogecoin, a currency whose value jumped to more than $50 billion. Therefore, many traders were interested in the most viable alternative to the coin.
Second, SHIB price rose because of its cheap price. As noted, Shiba Inu goes for $000040, meaning that with $10, one can get 250,0000 Shiba Inus. This means that many retail traders could afford the coin, which boosted its price sharply.
Third, there was significant demand from China as many celebrities promoted it in platforms like Weibo and WeChat. These are highly popular platforms with billions of users. Therefore, all these people and the cheap price helped push it higher. Finally, there was the fear of missing out among many trader who had missed the rally of Dogecoin.
SHIB is worthless but…
In my view, like I wrote then, Shiba Inu was – and still is – a worthless item whose value came because of the massive pumping in the internet. However, as I warned, this does not mean that traders should short it. Shorting is a situation where you place a bet that its price will decline.
The risk of shorting Shiba Inu price is that the forces that propelled it up could still do it again. The risk of shorting is that the maximum loss you can make is infinite since there is no limit of how high it can go. On the other hand, the biggest risk to buying it is always zero.
What next for Shiba Inu prices?
It is hard to tell where SHIB prices will go from here since we are still in an age of irrational exuberance. It is still hard to believe that Dogecoin is worth more than $44 billion. Turning to the hourly chart, we see that the Shiba Inu price has been in a tight range in the past few sessions.
This is evidenced by the fact that the Average True Range (ATR) has dropped to the lowest level since last week. This sends a signal of a calm before the storm, meaning that the price will likely breakout in either direction.