Don’t hold your breath for $0.01 either…
As Shiba Inu (SHIB) broke through the all-time high of $0.000034, many retail investors and ShibArmy members are calling for a $1 SHIB.
“If BTC can get to $1, so can SHIB!”
“If DOGE can get to $0.01, so can SHIB!”
“SHIB is going to reach $1, just you wait.”
As a SHIB holder, I hate being a party pooper. But a serious reality check is needed. There is an understandable fascination with psychological levels like $1, $0.1 and $0.01, but in the case of SHIB, these predictions defy basic math.
Quick revision of market cap. It forms the basis for reasonable price predictions in crypto and the stock market. The market cap provides a quick sanity check, telling you the amount of total investor money required to hit your price target.
The circulating supply plays a crucial part here. Bitcoin can hit $65,000 per coin because it only has a circulating supply of 18 million. Meanwhile, SHIB is super cheap per token because there are literally hundreds of trillions of them flooding the markets.
Bitcoin
Ethereum
Cardano
Now, let’s look at why SHIB at $1, $0.1 and $0.01 defy rhyme and reason.
SHIB at $1
You need a $400 trillion dollar market cap.
There’s not enough money in the world for this, by far.
$400 trillion dollars is roughly:
300x bitcoin’s market cap;
150x the total crypto market cap;
20x all USD in circulation;
20x the US GDP;
10x all circulating money in the world.
In fact, all real estate globally is worth only $300 trillion!
SHIB at $0.1
This needs a $4 trillion market cap. That’s:
roughly bitcoin’s market cap at $200,000;
approaching twice the entire crypto market cap ($2.6 trillion)
almost 3 times the entire altcoin market cap ($1.5 trillion)
Many analysts believe the 2020–22 market cycle bull run will see the total crypto market cap reach $10 trillion dollars, roughly equal to gold.
Do you think almost half of all investor money in crypto at the market cycle peak will be in Shiba Inu (SHIB)?
Let’s return to the problematic quotes at the top.
“If BTC can get to $1, so can SHIB!”
There were 5.5 million BTC at the time it reached $1. There are 400 trillion SHIB. It takes 73 million times the money ($400tn/$5.5m) to raise SHIB to $1 compared to what was needed for bitcoin. More generally, it doesn’t make sense to directly compare the prices of two cryptocurrencies with different circulating supplies.
“If DOGE can get to $0.01, so can SHIB!”
A 1 cent Dogecoin required only $1.25 billion of investor money in Jan 2021. That’s not much — the entire crypto space already had a $900 billion market cap. On the other hand, a 1 cent SHIB requires $4 trillion dollars. We need more than 3000 times the money ($4tn/$1.3b) to raise SHIB to $0.01 compared to what’s needed for DOGE to reach $0.01.
Burning
To overcome the above issues with raising the market cap, SHIB supporters raise the prospect of token burning. Indeed, one way to raise the price in the above formulae is to reduce the circulating supply.
This is a legitimate strategy.
The issue is the negligible burning rate. Shiba Inu has no regular burning mechanisms. The team relies on burning tiny fractions of the circulating supply during specific events.
For example, the minting of the new Shiboshi NFTs burns a maximum $1 million worth of SHIB. That’s less than 0.01% of the circulating supply.
We see the burning of $25,000 worth of SHIB and LEASH during new pair listings on ShibaSwap. That’s less than 0.0002% of the circulating supply each time.
Other mechanisms are currently being explored, such as burning some percentage of each transaction with the ETH-RYO trading pair and NowPayments — a new collaboration between SHIB and e-Commerce.
Generally, it’s difficult to reduce circulating supply through this regimen of disorganised burning. Unless SHIB can burn something like 99% of its current supply, a $0.01 SHIB won’t be coming any time soon.
In the meantime, SHIB believers will need to rely on buy-side pressure — attracting new buyers to bump up the market cap.
And as we saw, the simple math just doesn’t work out.
If everyone in the world put their money into SHIB, it would barely scratch 10 cents. The $40 trillion market cap necessary is roughly the entire global M2 money supply. How on earth will SHIB hit $1?
But that’s totally fine!
People just need to shake off the obsession with these psychological levels. If SHIB hit just $0.001, buyers getting in right now would see a 20x upside.
Don’t be too greedy.
Final Words
The markets are a zero sum game.
The majority of naive retail traders lose money by being exit liquidity for smart money at sky high prices—often whales.
More precisely:
Smart money (including the savvy retail traders) entered SHIB during its accumulation zone between $0.000005–10.
Most SHIB holders are whales — 80% of the supply is held by just 100 wallets.
Naive traders FOMO in after whales pump up the prices. Whales then take profits 200–400% up, exploiting the lack of market psychology understanding by naive traders.
To add insult to injury, many naive traders refuse to exit their positions (or add more), because they operate under the grandeur illusion that prices can go a further 250x and hit $1.
In summary, naive traders:
FOMO into pumps instead of spotting trends in advance.
Don’t do basic math. Does the market cap make sense?
Are desperate to get rich quick. A 20x $0.001 isn’t good enough for you?
It’s why statistically the majority of memecoin traders tend to lose big. Don’t be one of these people! Be more like smart money.