Hi, it’s Joanna in Singapore. The world has been captivated by a $30 billion joke cryptocurrency with a weird backstory. But first…
“Memes have value”
Shiba Inu is now the 11th-biggest cryptocurrency by market value.
That means that a token created only last year by someone calling themselves Ryoshi, and themed after a Japanese hunting dog, is now worth more than $30 billion—about double the market capitalization of Peloton Interactive Inc. and the gross domestic product of Albania.
Shiba Inu was even able to briefly surge ahead of Dogecoin, its apparent progenitor. And the coin’s value remains higher than those of blockchain networks with lots of development, like Avalanche, Terra and Polygon.
How did we get here? Meme stocks live and die by attention, and the unusual backstory of SHIB, as the token is known, is rooted in a publicity stunt. Early on, Ryoshi gave half of the supply of Shiba Inu to Ethereum co-founder Vitalik Buterin, one of the most respected and well-known people in crypto.
Buterin, understandably, was perplexed that someone had sent him trillions of SHIB without his permission. “I don’t know what they were doing issuing those coins to me,” he said in an interview with Bloomberg. This spring, he donated tokens worth about $1 billion to Covid-19 relief efforts in India.
The Shiba Inu website claimed victory. Buterin’s move ensures “our long-term success and stability,” the site now reads. And it quotes Ryoshi: “Thank you to the woofmeister for enabling true decentralization.” The price tanked after Buterin’s donation as he sold coins, but SHIB’s notoriety persisted. By October, its value had surged into the tens of billions.
It can be hard to find the reason behind market moves in Bitcoin and Ether, much less Shiba Inu. But a couple things have probably helped the dog-themed cryptocurrency. Besides the attention from Buterin, there’s also the really, really low price. You can buy a lot for not very much money—making it more fun and low-stakes than comparable bets. Shiba Inu has also created popular non-fungible tokens, or NFTs, further bolstering its place in the crypto consciousness.
In some ways it’s helpful that SHIB is so clearly ridiculous. “This is counter-culture, cult stuff, and its disciples revel in that. The more absurd it is, the better,” said Antoni Trenchev, co-founder at crypto lender Nexo. “It’s like an inside joke—only as it goes viral, the number of people in on the joke can go into the millions pushing the valuations out of this universe.”
Of course, SHIB holders are not value investors, and the coin’s price is unstable. For example, its value recently fell about 25% in one day after a Shiba Inu whale (a name for someone with a very large portion of the outstanding supply) appeared to be selling part of their stake. And the market value is still off its October highs.
But there’s reason to think that Shiba Inu is a bellwether of a larger, more durable trend. “Memes have value and have been an investible thesis in 2021,” Jonathan Cheesman, head of over-the-counter and institutional sales at crypto derivatives exchange FTX, said in an email. “Don’t short things millennials think are funny.”
Culled from : Bloomberg