Why Did Shiba Inu Lose Over 50,000 Wallet Holders in a Week?
According to CoinMarketCap, 43,634 wallet addresses sold Shiba Inu tokens (SHIB) in the last week, with 32,832 wallet addresses selling the most in a single day. Shiba Inu added 118,695 new token holders between December 21, 2021, and March 15, 2022, bringing the total number of token holders to a new all-time high of 1,199,453. However, it lost 43% of its new users in one week, which is equivalent to losing 34% of its trading volume in three months. So, what was the cause of this steep loss of new token holders?
US Fed rate hike could be the reason
It appears the timing of Shiba Inu’s sharp reduction in token holders is no coincidence. On March 16, the Federal Reserve announced that it would raise interest rates by 0.25%, the first of several such hikes planned for this year, and the first since 2018. The Fed’s rate hikes are aimed at slowing US inflation, with the latest government data reporting that inflation stood at 7.9% in February 2022, the highest level in 40 years and the tenth consecutive month of inflation figures which are above 5%.
The interest rate hike could be the main factor causing Shiba Inu holders to leave highly speculative investments. “Assets that have benefited most from ultra-low interest rates — think high-octane growth stocks with earnings well off into the future and non-cash-flow-generating assets like cryptocurrencies — have been most susceptible to a pullback given the prospect of higher interest rates,” confirmed Greg McBride, Bankrate chief financial analyst.
High interest rates and riskier investments
When interest rates rise, as a rule investors tend to move away from riskier, speculative investments and towards safer, high-returning options such as bonds, especially when coupled with the fact that meme coins such as SHIB and Dogecoin (DOGE) are even more volatile than other cryptocurrency assets such as Bitcoin or Ethereum. In the second half of 2021, SHIB and DOGE on the back of unprecedented speculative hype delivered profit to investors on a global scale. A highlight of this surge was in October 2021 when it was revealed that one wallet had bought $8,000 in SHIB in the summer of 2020. worth over $5.7 billion at its all-time high valuation. However, for such volatile meme tokens, as the saying goes ‘what goes up, must come down’ with SHIB declining from a high of $65 SHIB in October to $21 in January, rising gently to $27 at the start of March, and remaining around that $23–25 price range to the end of the month, according to Statista data which uses a more accessible pricing format of the cost per dollar for one million SHIB tokens.
Should you buy or sell now?
The SHIB token, which was launched in August 2020, increased significantly in value in 2021. Thousands of early investors who purchased the meme token became millionaires as a result, and not surprisingly the project saw a massive influx of followers. Since then, developers have expanded the SHIB’s ecosystem value by launching decentralized exchanges, NFTs, and complementary cryptocurrencies with, while attempting to transform SHIB into a legitimate crypto currency worthy of praise. One change worthy of note is that Shiba Inu is increasing token burns, “which have sparked renewed interest in the token at the beginning of 2022,” according to CoinMarketCap.
Furthermore, a SHIB-based blockchain is being developed in order to decouple the entire Shiba Inu platform from the Ethereum network, which it currently runs on. As the number of SHIB application use cases grow, including American electronics retailer Newegg which added SHIB at the end of 2021, followed the adoption of SHIB by over 500 merchants, according to CoinGate. Indeed, it’s reported that Turkey’s finance minister has announced that they are looking into using SHIB as an alternative currency to hedge against the country’s 191% inflation rate, which caused a short term bump in the price of SHIB.
SHIB is currently trading at $0.00002764, up 4.86% in the last 24 hours and down more than 70% since reaching an all-time high of $0.00008845 in October 2021, according to CoinMarketCap, with a total market capitalization of $15.1 billion. However, it’s believed that it is unlikely SHIB will replicate last year’s rapid rise. Coin Price Forecast’s prediction for 2022, is based on an expectation for Shiba Inu to reach an increase of just under 350%, bringing its value to $0.00003174.
Before investing in any cryptocurrency, whether a popular meme coin or a classic such as Bitcoin, it is recommended that you conduct extensive research and analysis. Apart from Shiba Inu, BigONE believes that there are many other interesting cryptocurrencies worth considering ranging from metaverse token Zilliqa (ZIL) with a 140% plus rise this month, to the likes of IOTX (+100%), Bancor (+111%) and Drep (+169%) to name but a few.
Listen to the latest news about Sandbox’s partnering with World of Women on our March 9 ‘Crypto Daily News Daily Recap’ on YouTube here, with co-hosts Vibin and the Crypto Beast.
