Sometimes it’s better to be lucky than good; Investors in tokenized cryptocurrencies like Dogecoin and Shiba Inu made huge profits during the height of the crypto bull market in 2021. But the good times are over; Rising interest rates have dampened investor appetite for riskier assets such as cryptocurrencies, and the two coins have returned most of those gains.
There is hope for a recovery in the market in 2023, which may give investors confidence that they will invest in altcoins again. But take your time with these meme currencies; consider the market landscape and this important information before putting your hard-earned money into a job.
Acceptance drives demand, which drives value
The digital currency function is the main purpose of many tokens. The room must have a function, otherwise why would anyone need it? It’s like getting a salary but not being able to spend it. Fiat currency has value because it is accepted almost everywhere, even in most foreign countries.
Lack of adoption is a major hurdle for Dogecoin and Shiba Inu. Some merchants accept Dogecoin and Shiba Inu, but these usually cannot be used to pay for products. You cannot hire many people who will accept Dogecoin as payment. At the moment, both parts are more novelties than anything else.
The surge in these coins in 2021 was driven by a frenzied hype that mimicked the demand effect as they were very popular for a short period of time. However, this ended up playing musical chairs; the music died down, and investors who bought close to their maximum and failed to sell fast enough saw most of their profits evaporate.
Unless the market gets wildly speculative again, it may take some acceptance to create real demand for these coins, and none of them have much real-world use yet.
Math plays against both coins
Supply is another factor that affects the value of a currency. You can see below that inflation has risen sharply as the overall supply of US dollars has increased during the pandemic. The increase in the number of US dollars has reduced their purchasing power.
The same concept applies to digital currencies; One of the attractions of bitcoins is that there can be no more than 21 million of them. An increase in demand will only increase their value, since the supply of bitcoins is limited. In contrast, the supply of Dogecoin is unlimited, with 10,000 DOGE in circulation every minute. The Shiba Inu was built with a maximum supply of 1 quadrillion, over 47 times the total money supply of the United States! There are approximately 589 trillion tokens in circulation today, so it is unlikely that the Shiba Inu will ever be able to maintain a meaningful price per token.
The limited distribution and abundance make the Dogecoin and Shiba Inu cryptocurrencies unlikely to be useful or long-term value. Both of these currencies are memes and should be treated as such, only bought with money that you can easily lose.
Instead, consider this best altcoin
But this bear market could be a buying opportunity; consider Ethereum, not Dogecoin or Shiba Inu. Ethereum has the highest market value of any altcoin and is the most widely used blockchain, hosting around 3,000 decentralized applications. The coin is down 75% from its peak, but the thousands of applications running on the Ethereum blockchain give it a better chance of mainstream adoption as the crypto industry grows and matures.
Bear markets don’t happen every day, and you don’t want to miss the opportunity to chase the bullshit and ignore the high-quality assets that are up for sale. Minimize your investments in meme currencies like Dogecoin and Shiba Inu and focus on Ethereum and other cryptocurrencies with real chances of real long-term value.
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