Could Shiba Inu Coin Reach $1 By 2025?

Despite the recent sell-off, Shiba Inu (CRYPTO:SHIB) is still the 13th most valuable cryptocurrency, with a market value of nearly $19 billion. That's impressive in its own right, but the story becomes the stuff of legend when you dig a little deeper. Since hitting a low in November 2020, the token price has skyrocketed 60,000,000%, meaning a mere $17 invested in Shiba Inu last year would be worth $10 million today.

Very few (if any) assets have ever generated so much wealth in so little time. And after Shiba Inu fell 60% from its high, many investors are hoping for a repeat performance. In fact, some Shiba supporters are forecasting a token price of $1 by 2025. That implies another 2,965,500% upside from its current price of $0.00003372 -- that's an annualized return of 1,212% over the next four years, which is relatively mild compared to its historical performance.

So, could Shiba Inu really hit $1? Let's dive in.

What makes Shiba Inu valuable?

In August 2020, the pseudonymous Ryoshi created Shiba Inu, co-opting the mascot popularized by Dogecoin. To that end, Shiba Inu has earned a reputation as "the Dogecoin killer," a nickname that Ryoshi attributes to its greater publicity and utility.

Specifically, Shiba Inu is an ERC-20 token, a type of smart contract built on the Ethereum blockchain. Theoretically, that does make it more functional than Dogecoin, because the token is compatible with Ethereum's thriving ecosystem of decentralized finance (DeFi) applications.

However, that compatibility hasn't actually translated into utility. Shiba Inu has not been incorporated into popular DeFi protocols like Aave or Compound, nor is it a widely accepted form of payment. In fact, there is very little you can do with the token, and Shiba Inu's soaring price can be attributed to two things: aggressive marketing on social media and brilliant branding.

In other words, with the rise of Dogecoin still fresh in the minds of cryptocurrency investors, a name like "Shiba Inu" was sure to turn some heads. After that, hype generated on social media platforms took care of the rest.

Is $1 a realistic price target?

Popularity is never a good long-term investment thesis, at least not without something more substantial to back it up. But in the short term, Shiba Inu is a perfect example of just how powerful popularity can be. That's why some investors are still hoping it achieves what Dogecoin never managed: They want to see it cross the $1 threshold.

Unfortunately, that's impossible. With a $1 price tag, Shiba Inu's market value would reach $550 trillion. For context, global gross domestic product -- the value of all goods and services produced across every economy -- is expected to reach $94 trillion in 2021 and $116 trillion by 2025. If Shiba Inu did indeed reach $1, it would be worth several times more than the combined output of every economy in the world.

For that reason, I think investors should steer clear of this cryptocurrency. If you're interested in digital assets, there are better places to put your money.

This article first appeared in The Motley Fool.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool owns and recommends Aave, Compound, and Ethereum. The Motley Fool has a disclosure policy.