Shiba Inu (SHIB) was launched in 2020 as an imitation of Dogecoin (DOGE), which itself is an imitation of Bitcoin (BTC). The token initially traded at $0.00000000051, reached an all-time high of $0.00008845 in 2021, and currently trades at approximately $0.0000057.
In other words, a $1,000 investment at the time of Shiba Inu’s listing briefly surged to $173.4 million and has now shrunk to about $11.2 million. For the earliest investors, this still represents substantial returns, but any investor who bought Shiba Inu at its all-time high is currently at a loss.
Should contrarian investors buy Shiba Inu now, hoping for a recovery in the next cryptocurrency summer? Or should they avoid it and stick with blue-chip tokens like Bitcoin?
The Bull and Bear Cases for Shiba Inu
Shiba Inu cannot be mined like Bitcoin or Dogecoin. It is an ERC-20 token on the Ethereum (ETH) blockchain, and its creators minted the entire supply—one quadrillion tokens—before listing. They donated more than half of the tokens to Ethereum co-founder Vitalik Buterin, who subsequently burned most of that holding.
To date, Shiba Inu’s circulating supply remains 589.5 trillion tokens, so it cannot be valued through scarcity. Nor does it support the development of decentralized applications or other crypto assets (like Ethereum), as it does not have its own Layer 1 blockchain. Unlike Bitcoin and Ethereum, Shiba Inu has no spot price ETF support.
Bears argue that these limitations will prevent Shiba Inu from keeping pace with Bitcoin, which is valued for its scarcity, and Ethereum, which is valued for its utility. Over the past 12 months, Shiba Inu’s price has plummeted more than 60%, while Bitcoin and Ethereum have fallen 30% and 17%, respectively.
Bulls, on the other hand, would point out that Shibarium—a Layer 2 network running on top of Ethereum—supports smart contracts (used to build decentralized applications) and accelerates Shiba Inu transactions. They also note that T. Rowe Price recently included Shiba Inu and Dogecoin in its upcoming Price Active Crypto ETF. If that ETF is approved and launched, it could attract more investors and create a tailwind for these two out-of-favor meme coins.
Shiba Inu Faces the 589 Trillion Supply Problem
Another obstacle to a price increase is Shiba Inu’s excessively large supply. Currently, over 589 trillion tokens are in circulation, which is why each token trades at such a low price. Nevertheless, this still gives Shiba Inu a market capitalization of $3.4 billion.
Simple math shows that a price of $1 per token, multiplied by a circulating supply of 589 trillion tokens, would give Shiba Inu a market cap of $589 trillion. For reference, the total market cap of all 500 companies in the S&P 500 is only $67 trillion, which would make Shiba Inu worth nearly nine times that amount.
It is self-evident that it is unrealistic for a cryptocurrency with no real-world use case to be worth far more than the entire basket of the highest-quality U.S. companies. However, the Shiba Inu community is trying to address the supply issue by “burning” tokens—sending them to dead wallets from which they can never be retrieved. In theory, the price per token should rise naturally in proportion to the number of tokens burned, providing a possible path to the $1 milestone.
Burning Enough Tokens Could Take Thousands of Years
Based on Shiba Inu’s current market cap of $3.4 billion, burning 99.99998% of the 589 trillion circulating tokens, leaving only 3.4 billion tokens, would theoretically make the price per token reach $1.
However, the Shiba Inu community burned only 175 million tokens last month, which annualizes to approximately 2.1 billion tokens. At the current rate, it would take more than 280,000 years to burn enough tokens to support a $1 price.
But it gets worse, because this method does not actually create any value. Each Shiba Inu investor would see their token holdings reduced by 99.99998%, so even though each token is worth $1, the price increase merely offsets the decline in holdings. In other words, their net financial position would be exactly the same as it is now.
Conclusion
Shiba Inu may receive a modest boost from the expansion of Shibarium or a new ETF, but its massive supply and lack of real-world use cases are fundamental constraints. Compared to Bitcoin and Ethereum, Shiba Inu possesses neither the value of scarcity nor platform utility, leaving long-term holders exposed to significant inflationary erosion. Investors should carefully weigh these realistic obstacles when considering including it in their portfolios.