Why the sudden rise and fall of SHIBA INU?

Why the sudden rise and fall of SHIBA INU?

Earlier in 2021, billionaire entrepreneur and Tesla CEO, Elon Musk threw his weight behind Dogecoin. This meme coin was introduced as a joke on Bitcoin rise. The support the coin got propelled it into the spotlight. This rise influenced the increase in the popularity of another coin, which was based on a Japanese breed dog. This coin was named Shiba Inu. However, in recent times, this cryptocurrency has suffered a significant drop in value. This is all related to the general cryptocurrency market.

Indeed, this token hit an all-time high value of $0.00008845 in October 2021. However, as the high-flying cryptocurrency reverses most of its October gains, investors have been left reeling. The notorious volatility of the crypto market makes it difficult to predict. However, with weak fundamentals, the significant and sudden fall in the price of this meme coin can be attributed to two major reasons.

Whales (large holdings) can earn profits

The fall in the value of Shiba Inu from its all-time high price of $0.000088 comes as a result of fears among investors that large holdings can earn enormous profits. This represents a major threat since Shiba Inu depends on the greater fool theory, which proposes that several people purchase it to put it for sales to others for more in the future. Anytime these large holdings start selling their reserves, there could be a sharp dip, which could break the greater fool assumption for several investors – especially the new one – resulting in a chain reaction of selling.

You can get up to date information on the fluctations in the prices of cryptocurrencies yourself by using the site bitqt.io/. You can see the changes as they fluctuate immediately giving you a proper view of the market.

On Nov. 1, there was a major Shiba Inu whale who moved about $2.78 billion worth of tokens out of their wallet to different accounts on November 1, 2021. They initially bought 70 trillion coins, which was valued at $8,000 back then in August. It was believed that it might finally be prepared to provide some profits. However, according to statistics from coinmarket.com, there were only 10 investors that controlled an immense 66% of the whole Shiba Inu supply. In comparison, only 5% of the total Bitcoin supply is controlled by the top 10 Bitcoin investors. This high concentration of ownership ensures that Shiba Inu is a risky investment since these large holdings can significantly affect the price of the coin. Simply put, their actions will have a huge impact on the coin. For instance, when this much controlling power is concentrated on a small group of investors, there will be fewer coins in the market, making the demands for the coins higher, thereby driving the price up. If they decide to move on from the investment, others will be left holding the bag.

Mainstream exchanges could ensure that Shiba Inu becomes even more volatile

As of November 2021, there were about 511,000 people who have signed a change.org petition that demands that Robinhood Markets add adequate support for Shiba Inu. This is as a result of successful appeals made to Coinbase and Binance. The former allowed Shiba Inu trading for its New York traders on Nov 5, 2021. However, these moves were too little too late.

Since its inception, Shiba Inu had already soared by 60,000,000% by that time, irrespective of some questionable fundamentals. The burgeoning mainstream support ensures that large holdings of Shiba Inu can easily sell their digital assets for fiat currency, rather than purchasing other tokens. This makes it considerably easier for them to make real-world profits. This can also increase the volatility of the digital asset, making it a very risky investment.

Conclusion

Shiba Inu took the world by storm as it grew in recognition. However, the presence of large investors, who bought the digital asset in enormous quantities, ensures that the movement of Shiba Inu’s price is highly dependent on them. Shiba Inu was thought of to be the next big deal. However, its rise to prominence was short-lived as other investors were wary of engaging in such a risky investment.

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