Valuations for cryptocurrencies have come roaring back across the first four months of trading in 2023. This rising tide has lifted many boats, and Shiba Inu (SHIB 4.52%) and Cardano (ADA 1.81%) are among the list of leading cryptocurrencies that have posted big gains this year. As of this writing, the Shiba Inu is up roughly 23%, while Cardano is up about 55%.
Which of these rallying crypto tokens looks like the better buy at today's prices? Read on for a look at the competing bull cases for these two cryptocurrencies, as well as a determination of which token ultimately looks like the better investment.
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The case for Shiba Inu
In addition to the possibility that meme-powered buying or overall valuation momentum will push the price of the Shiba Inu higher, it's possible that the cryptocurrency's price will climb due to burning. In the cryptocurrency world, token burning takes a token out of circulation. By reducing the total outstanding token count, the supply of the token is reduced, which has the potential to be a substantial positive pricing catalyst for the tokens still in circulation. Shiba Inu has some projects that could significantly increase token burning and help push Shiba Inu's price higher.
The developers behind Shiba Inu are gearing up to launch a metaverse in support of the token, with users being able to rename plots of land they have purchased by burning the token. If the Shiba Inu metaverse winds up being a big hit, it's possible that resultant token burning and an increase in overall interest in the Shiba Inu token will result in substantial price gains from current levels.
In addition to the metaverse project, the Shiba Inu team is rolling out its Shibarium Layer-2 services platform to improve transaction times, reduce transaction costs, and pave the way for a broader applications and services ecosystem to be built around the token. All transactions conducted through the Shibarium Layer-2 solution will result in the burning of tokens. The Shiba Inu team has also recently announced that it will release a cold-storage wallet that will allow Shiba Inu owners to securely store their tokens offline.
The Shiba Inu token has already posted incredible gains since its inception, mostly on hype alone. If the Shiba Inu team can introduce and scale new services built around the cryptocurrency, the meme token could develop a much stronger fundamental valuation case and see big pricing gains.
The case for Cardano
Compared to Ethereum, which is the leading network for Layer-1 blockchain services, Cardano can offer lower transaction times and costs. The Cardano network also appears to be gaining ground compared to other would-be Ethereum rivals. Notably, Cardano has continued to attract developer support and grow engagement, while rival Solana has seen developer engagement decline.
Cardano also doesn't need to unseat Ethereum for its token to deliver strong pricing gains from current levels. With a market cap of roughly $13.4 billion, Cardano's valuation comes in at just a fraction of Ethereum's roughly $220 billion market cap.
If the network continues to gain traction as a hub for building and expanding blockchain applications, the Cardano token could see strong positive pricing catalysts. The token is the currency that underpins the Cardano network, and more applications being launched and scaled on the blockchain should be a positive catalyst for token demand.
The Cardano team also appears to be dedicated to fostering long-term project development on its network. The Cardano Foundation has launched a $100 million grant project that will support projects built on the network. Based on GitHub data, the network is already a top destination in terms of blockchain development activity, and its long-term growth story could still be in the very early stages.
If the broader crypto market continues to enjoy bullish tailwinds, it's likely that Cardano's token will continue to gain ground. In addition to potential momentum-based valuation catalysts, Cardano has relatively strong positioning in the Layer-1 blockchain services market, and continued development and scaling for apps on its network could spur pricing gains for the token.
So, which cryptocurrency is the better buy?
For most investors, Cardano probably presents a superior value and long-term growth proposition. While Shiba Inu has enjoyed periods of incredible performance thanks to meme momentum and now looks to be building a more robust service and content ecosystem, the token's overall value proposition and long-term outlook pale in comparison to Cardano's services and ecosystem. Therefore, while both cryptocurrencies can safely be classified as high-risk, high-reward investments, Cardano offers the better risk-reward profile.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cardano, Ethereum, and Solana. The Motley Fool has a disclosure policy.
