The Shiba Inu (SHIB -0.33%) cryptocurrency opened at a price of $0.00000000008 per token in 2021 before soaring by a whopping 107,499,900% to a peak of $0.000086 in October of that year. If you had a crystal ball and timed your investment perfectly, that gain could have turned just $1 into more than $1 million.
Some cryptocurrencies have a genuine use case. Bitcoin, for example, is used by many investors as a store of value, kind of like a digital version of gold. But Shiba Inu has no real utility, it's a meme token that mostly swings up and down based on the whims of speculators.
As a result, it fell more than 90% from its peak by mid-2022. Even after a positive year in 2024, Shiba Inu's current price of $0.000023 is still more than 70% lower than its all-time high.
However, cryptocurrencies are riding a series of tailwinds that could help them create a significant amount of value during 2025. So could Shiba Inu stage another historic run and hit $1 per token this time around? The answer might blow your mind.
Risk-on sentiment, falling interest rates, and a pro-crypto U.S. government
Investors were extremely bullish in 2024. The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all hit record highs throughout the year. Plus, the total value of all circulating cryptocurrencies reached an all-time high of $3.9 trillion.
Favorable macroeconomic conditions were a big help. The U.S. economy remained strong, while at the same time the Federal Reserve declared victory over the inflation surge from a couple of years ago, and started cutting interest rates in September. Lower rates reduce the yield on risk-free assets like cash, which makes growth assets like stocks -- and even cryptocurrencies -- more enticing to investors.
Sentiment grew even more positive after former President Donald Trump won the U.S. presidential election in November, because he campaigned on pro-business policies like deregulation and lower corporate taxes. Plus, he has promised to lead the most pro-crypto administration in American history -- he already nominated crypto advocate Paul Atkins to run the Securities and Exchange Commission (SEC), pending Senate approval.
Those factors have created a risk-on environment that's been a boon for speculative assets like Shiba Inu. Therefore, even though the meme token has no real use case, it still more than doubled last year as investors swooped in hoping to catch another historic rally.
Shiba Inu faces fundamental challenges, including a supply problem
According to Cryptwerk, just 998 businesses around the world are willing to accept Shiba Inu as payment for goods and services, and many of them are obscure providers of internet and crypto services, and even online gambling houses. Shiba Inu simply doesn't function well as a currency; aside from its extreme volatility, the legacy Ethereum network upon which it is built is clunky and expensive to use.
Shiba Inu developers created a Layer-2 blockchain solution called Shibarium to solve some of those issues, but it doesn't appear to have increased consumer adoption. Simply put, another speculative frenzy might be the only way Shiba Inu can stage meaningful upside from here.
But reaching $1 will be almost impossible in Shiba Inu's current state because it has a supply problem. There are 589.5 trillion tokens in circulation, so based on the current price-per-token of $0.000023, Shiba Inu has a market capitalization of about $13 billion.
Simple math dictates that a price per token of $1 would result in a market cap of $589.5 trillion. That would make Shiba Inu 159 times more valuable than Apple, which is the world's largest company (valued at $3.7 trillion). It would also be more valuable than the total wealth of every person on Earth, which was $454 trillion at the end of 2022, according to UBS.
The Shiba Inu community is trying to solve the supply problem by burning tokens, which removes them from circulation forever. The simplest way to do that is by sending tokens to a dead wallet where they can never be retrieved. Theoretically, the price per Shiba Inu token should rise organically in proportion to the number of tokens burned.
Image source: Getty Images.
Shiba Inu could technically reach $1
Investors would have to burn 99.99998% of the current supply in order to send Shiba Inu to $1, based on its current market cap. Therefore, nearly all of the 598.5 trillion tokens in circulation need to be eliminated, leaving just 13 billion.
Only 2.4 billion tokens were burned in the past month, which translates to an annualized figure of 28.8 billion. That won't be anywhere near enough to send Shiba Inu to $1 in 2025.
Here's the head-spinning part: At the current pace, it will take 20,460 years to burn enough Shiba Inu tokens to justify a price of $1.
But it gets even worse, because burning tokens doesn't create any value. It only reduces supply, which makes it appear as though the value of each token is higher because it trades at a higher price. As a result, even if you lived long enough to see all of the necessary tokens burned, you wouldn't actually make any money.
You would simply have 99.99998% fewer tokens, with the remainder worth $1 each. Shiba Inu's market cap would still be $13 billion, so after 20,460 years, your net financial position won't have changed at all.
