After soaring by 60,000,000% in the early opening to peak in late October, the Shiba Inu (SHIB) is one of the best performing assets in 2021.
But now, the price of the Shiba Inu is crashing. It seems, the decline will continue this year.
Citing The Motley Fool's recommendation, these are the two main reasons why investors should sell this Shiba inucryptocurrency in early 2022
The greater-fool
The greater-fool states that investors can achieve positive returns by buying an asset regardless of its valuation fundamentals and other important factors because other people will buy it at a higher price.
When it comes to the Shiba Inu, the big Shiba Inu rally started in early October after Tesla CEO Elon Musk tweeted a picture of his Shiba Inu puppy, named Floki.
initial spike, coins continue to bounce based on The greater-fool theory, investors who use this theory may even think that the asset they are buying is overvalued based on fundamentals or a long-term view of performance, but they still expect to make a profit because other investors (“fools” larger ones") will be willing to pay even more in the future.
Now that the Shiba Inu's valuation is falling (with a market cap of $16 billion, down 60% from an all-time high of $39 billion), the greater fool assumption doesn't hold -- meaning the key demand driver has disappeared. Unfortunately, the basics of tokens can't make up for the lost hype
As a token programmed on the BSC blockchain, Shiba Inu shares the technical limitations of its parent network. These problems include a low transaction capacity of 15 per second compared to newer blockchains like Solana, which can handle 50,000 transactions per second.The Shiba Inu also doesn't benefit from the trust and first-mover advantages of a big coin like Bitcoin, and its extreme volatility makes it a poor store of value.
As the price of the Shiba Inu drops, the investors' time horizons seem to be changing. According to data from Coinbase Global, the average token storage time on the platform has jumped to 61 days, up from just 10 days in November.This can be seen as a positive trend as established coins tend to have longer holding times (for example, Bitcoin averages 71 days)
But unlike mature cryptocurrencies, Shiba Inu ownership is highly centralized. According to data from coinmarketcap.com, the top 100 Shiba Inu wallets have 81% of coins in circulation, giving them great control over the price and the ability to make withdrawals (the cryptocurrency equivalent of a pump-and-dump scheme) by selling large amounts of coins in short time. In comparison, the top 100 Bitcoin wallets only control 14% of the coins in circulation.