Crypto Weekly: The elephant in the room

Shiba Inu from $0 to $50bn in a year

Let us start by talking about the elephant, or dog if you will, in the room. The Ethereum-based token Shiba Inu has surged over the last year to exceed a market capitalization last week of more than $50bn. Its market capitalization has since declined to around $40bn, while it is currently being the ninth largest cryptocurrency. Shiba Inu was anonymously launched in August 2020, releasing a whitepaper, or as Shiba Inu calls it: “woof paper” due to the cryptocurrency being inspired by a dog. At launch, 50% of the supply was locked to be traded in the decentralized exchange Uniswap, whereas the other half was sent to Ethereum co-founder Vitalik Buterin. The latter later burned 90% of his Shiba Inu tokens, while donating the remaining 10% to the India Covid Relief Fund. Not surprisingly, Shiba Inu was fundamentally launched as a joke, heavily inspired by Dogecoin, another cryptocurrency launched as a joke back in 2013. Shiba Inu supporters call the cryptocurrency a “dogecoin killer”. Using a 2021 term, both can respectfully be called meme coins like meme stocks such as GameStop.

Along with Dogecoin, which has a present market capitalization of $36bn, the two cryptocurrencies are not benefitting the crypto market as a whole. The crypto market is broadly known as a wild west compared to the traditional financial industry, lacking a regulatory framework and arguably some normality. For the market to achieve mainstream adoption and not remain a niche to a select few, it needs to discard the wild west perception. In such circumstances, having the ninth and 10^th largest cryptocurrencies with a combined market capitalization of approximately $75bn being obvious jokes, is not making it easier to shred the wild west perception. On the contrary, it keeps the masses away, both in terms of users, developers, and traditional market participants, as fewer participants want to be deeply involved in a market widely perceived as frivolous. To some degree, this shows the current challenges of the crypto market obstructing it to go fully mainstream.

Crypto companies are raising money at a fast pace