Shiba Inu may have started as a meme coin, but it has slowly made its way up the cryptocurrency leader board. With the ongoing crypto winter, most other coins have been reeling from losses or just about managing to keep their heads above water, especially in the last week or so. However, Shiba Inu has managed to fight the trend and register a 45 percent jump in the last seven days.
It even overtook Tron as the 13th largest cryptocurrency by market capitalisation for a short while. The rally even overshadowed Bitcoin and Ethereum, which saw seven-day gains of 2 percent and 8 percent, respectively. But what caused a jump of this magnitude, especially for a coin with little to no real-world utility? Let's find out.
On Thursday, June 23, 2022, Jerome Powell, who chairs the US Federal Reserve, said they were committed to combating record-high inflation. He also agreed that sharper rate hikes could cause unemployment. Equity and crypto markets took the US Federal Reserve's relaxed stance quite positively and seemed to have piggybacked on the good news.
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"We really need to restore price stability...because without that we're not going to be able to have a sustained period of maximum employment where the benefits are spread very widely," Powell told the US House of Representatives Financial Services Committee. "It's something that we need to do, we must do."
The speculation that followed this development caused meme coins to outperform the overall market, which is still trudging through the mud. On Thursday morning, prior to Powell's comment, Shiba Inu was at $0.0000097 and eventually rallied to a high of $0.000012 by Sunday. Even more impressive is that SHIB started at $0.0000074 on June 19, translating into a 48.6 percent gain for the week.
However, there are a few more factors besides Powell's comment behind this meteoric rise. The first among them is heavy speculation, which is driving investors to take more risk and bet on Shiba Inu's upside potential. Technical indicators such as SHIB's 10-day and 50-day moving averages, relative strength index, and the moving average convergence divergence (MACD) all indicate buy signals.
However, experts advise caution. "Traders buying meme tokens in this environment should be cautious before investing heavily in this asset class," warned Sebastian Ganjali, strategy head at Kryll – a developer of crypto trading bots.
The second possible reason is fundamental in nature. "The parabolic move by SHIB is mainly fuelled by the coming Shibarium protocol," said Adam O'Neill, chief marketing officer of Bitrue (a crypto exchange), to Coindesk. "This move is also partly coming from SHIB burnt token that has reached a total of 400 trillion milestones."
The SHIB Burn Portal, recently created to control Shiba Inu's liquidity, has now burnt over 56 billion SHIB tokens alone. This rapid extermination of the circulating supply could be another cause for ballooning Shiba Inu prices.
Shiba Inu has also piggybacked on rallying Dogecoin prices. On June 19, 2022, Tesla boss Elon Musk tweeted that he would continue to support Dogecoin. Investors inevitably took it as a positive sign and that was reflected in rising prices. Musk has previously been responsible for several Dogecoin price spikes. This time the upsurge seems to have also pulled along the Shiba Inu.
Lastly, crypto whales have been accumulating the Shiba Inu in sizeable chunks. According to WhaleStats – a whale leader board, the shit coin is now the second most-held token by the top 100 Ethereum whales. These top 100 whales currently hold 15 percent of all Shiba Inu tokens, amounting to $558.8 million. This means that the average Shiba Inu holding among these whales is reportedly worth $5.58 million or 512.3 billion SHIB tokens each.
