This speculative digital asset's best days might be a thing of the past.
Shiba Inu (SHIB -3.51%) burst onto the scene during crypto mania in 2020 and 2021. The digital asset skyrocketed in 2021 during a raging bull market, certainly making some early adopters wealthy beyond their wildest dreams.
But as things stand today, Shiba Inu is 89% below its peak price. Nonetheless, it has still soared 969,000% since its public launch in August 2020.
There's a possibility that this speculative meme token will make you a millionaire. For investors who have watched from the sidelines, this is probably what the hope is. However, that's only if a few things happen that go in its favor.
Greater utility, adoption, and support
It shouldn't be a surprise that the best way for Shiba Inu to make investors millionaires is if it can find ways to boost demand for its token, SHIB. Basic economic principles tell us that as demand rises, the price of something should jump as well.
But why would Shiba Inu experience stronger demand?
I think any cryptocurrency has a shot at long-term viability if it can introduce real-world utility. Tokens have mainly been used as a tool for financial speculation up to this point, and Shiba Inu is no different.
However, the recent introduction of Shibarium, a Layer-2 scaling solution, could change things. With a goal of increasing transaction speeds and lowering costs, this new feature might make Shiba Inu more useful when sending payments to others, as well as in gaming and metaverse decentralized applications. And this could help drive higher demand for the token.
Besides introducing valuable features that increase utility, Shiba Inu could simply gain more interest from the investment community. A strong group of supporters is what has helped propel this crypto to a market cap of $5.5 billion, making it the world's 17th most valuable digital asset.
If a powerful businessperson or tech entrepreneur, like Elon Musk, were to post something publicly that positioned Shiba Inu in a positive light, I'm certain its price would soar in no time. But this is totally unpredictable. And it means that Shiba Inu will just need to find ways of adding utility and increasing adoption.
Significantly reducing supply
Another important way in which Shiba Inu's network could surge in value and potentially make you a millionaire deals with the supply side of the equation. This crypto's founders intentionally made the token supply abundant. And there are now a whopping 589 trillion SHIB tokens in circulation. This partly helps explain why the current price of $0.0000094 is so low.
To get the token count under control, there's aburning mechanism in place. This is a situation where Shiba Inu tokens are sent to "dead," or inactive, crypto wallets, thus eliminating them from the supply. The hope is that this can lead to higher prices.
As of this writing, there were 512,000 tokens burned in the last 24 hours. At this pace, 189 million would be burned annually and 1.9 billion would be burned in a decade. This rate is hardly enough to put a dent in the supply. Unless this figure expands significantly, the change in supply won't matter.
Keep expectations in check
Individual investors are, understandably, trying to look for the big winners that can move the needle and seriously improve their financial lives. Who wouldn't want this outcome?
But Shiba Inu doesn't look like a smart place to park your hard-earned savings over the long term. It's extremely risky, and there's a high likelihood that it won't even exist a decade from now.
If getting your portfolio to a $1 million balance is the ultimate goal, it's best to consider tried-and-true methods, like investing in shares of high-quality businesses.
Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
