Why Are Ethereum Whales Buying Shiba Inu?

Follow the money. When big investors begin buying an asset, you'll want to take note. And that's what appears to be happening in the cryptocurrency market.

Investors who own large quantities of a cryptocurrency are known as crypto whales. It's not surprising that there are plenty of Ethereum (CRYPTO:ETH) whales since Ethereum is the second-largest cryptocurrency based on market cap.

What might be surprising, though, is that Ethereum whales are buying another cryptocurrency. Several of the top 1,000 holders of Ethereum have been scooping up Shiba Inu (CRYPTO:SHIB) , according to the whale-tracking website WhaleStats. But why? Here are three likely reasons.

1. A more attractive price

The most obvious explanation for why Ethereum whales are buying Shiba Inu is that the digital coin has a much more attractive price than it's had in quite a while. Shiba Inu has plunged more than 70% over the past three months. The last time that Shiba Inu was near its current price was back in early October of 2021.

Of course, Ethereum is down quite a bit as well. However, the decline of nearly 40% for the cryptocurrency over the past three months isn't nearly as steep as Shiba Inu's fall.

This isn't the first time that an Ethereum whale owned a lot of Shiba Inu. In October, an Ethereum whale bought 277 billion SHIB coins. Also, the largest Shiba Inu position is in a dead wallet created by Vitalik Butarin, the co-founder of Ethereum.

2. Expectation of wider adoption

Deep-pocketed investors wouldn't be interested in Shiba Inu, though, if they didn't think the cryptocurrency is likely to rise significantly in the future. One likely reason for optimism on that front is the expectation that Shiba Inu could be more widely adopted going forward.

But is this expectation realistic? There's a pretty good argument to be made that it is.

For one thing, Robinhood could choose to list the digital token on its trading platform. Granted, Robinhood executives have publicly downplayed the urgency to support additional cryptocurrencies. However, it wouldn't be surprising if Shiba Inu is added to the popular trading platform in 2022.

Also, the planned launch of the Shibarium layer-2 solution could spark wider adoption of Shiba Inu. With Shibarium, the transaction fees for Shiba Inu should be much lower than they are now. The exact launch date for Shibarium isn't known at this point, but it could happen by the middle of this year.

3. Metaverse opportunity

Ethereum whales could also be bullish about Shiba Inu's metaverse opportunity. So far, Shiba Inu has missed out on the recent frenzied investing in gaming coins. Although the meme coin might be late to the party, gaming appears destined to be a critical part of its future.

Shiba Inu Games signed up longtime gaming developer William Volk to lead the charge in the development of a multi-player game. It also brought an AAA studio (i.e., one that has developed multimillion-dollar games) on board for the effort -- Playside Studios. Playside has over 50 games to its credit, including games for Disney, Nickelodeon, and Warner Bros.

Developers recently provided a sneak peek at the Shiba Inu metaverse that's being developed. It's being referred to as the "Shiberse" but in the past has also been called the "Oshiverse."

Should guppies follow the whales?

Following the money doesn't necessarily mean investing your own money. All investors have their own risk tolerances and objectives. Yours could be (and probably will be) much different than those of the Ethereum whales buying Shiba Inu. Crypto guppies can swim in the same ocean as crypto whales, but they could prefer different waters instead.

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.

Keith Speights owns Walt Disney. The Motley Fool owns and recommends Ethereum and Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy.