Shiba Inu (SHIB) had one of the biggest returns in financial history last year. However, this situation was reversed in 2022. According to consulting giant The Motley Fool analyst Anthony Di Pizio, the token faces a long list of hurdles that could lead to further price increases. It is not possible to overcome all of them. Here are the details…
Shiba Inu (SHIB) has regulatory hurdle
SHIB is on the radar of just about every investor as it has yielded over 40,000 percent returns in 2021. It provided one of the biggest returns in financial history. But since then the tide has subsided. According to an analyst at consulting giant The Motley Fool, the Shiba Inu has not evolved to offer any real use cases. As a result, it has lost 64 percent to date in 2022. Despite the steep decline, the analyst explains five reasons why he is still not a buyer. The first is that SHIB is not regulated.
The first reason the analyst stays away from SHIB is because it’s completely unregulated. Ironically, that’s one reason why some investors choose to own it. Because they think this keeps them out of the traditional monetary system. But this approach can have important consequences, according to the analyst. For example, if Shiba Inu tokens are lost or stolen, there is virtually no recourse for the owner.
Regulations are coming
This second clause may contradict the first, but the analyst’s second reason for avoiding SHIB is because regulation is inevitable. In the wake of the crashes in the cryptocurrency markets, the US government is more aggressively pursuing new laws to protect investors. Shiba Inu owners (and crypto owners in general) will soon lose their ability to remain anonymous, according to the analyst.
This is because their brokers and exchanges will be required to report all client trading activity to the Internal Revenue Service for tax purposes from 2023. Cryptocurrencies fit the legal definition of a financial security that could soon place a heavy compliance burden on brokerages and exchanges and increase trading costs for customers. Di Pizio uses the following expressions:
Simply put, more regulation is a net positive for consumers. But it will also remove most of the reasons people want to own tokens like the Shiba Inu.
Consumers, operators do not want to use SHIB
The ultimate goal of most cryptocurrencies is to be a means of payment that outperforms traditional money. Theoretically, this will result in sustained price gains, as people will constantly trade in tokens and give the incentive. But until now, even the crypto market leader Bitcoin has not gained mass acceptance. According to Di Pizio, the Shiba Inu is light years behind. Around 7,879 businesses worldwide accept Bitcoin as payment. But only 659 accept Shiba Inu. The acceptors are mostly small, obscure sellers. The analyst uses the following statements:
Given the Shiba Inu’s significant return in 2021 and its subsequent collapse in 2022, how many businesses that operate in such a volatile currency can manage cash flow? Probably none. As a result, the Shiba Inu’s seller base is unlikely to grow significantly any time soon.
Analyst draws attention to Shiba Inu’s supply problem
There are currently 589 trillion Shiba Inu tokens in circulation. That’s why they’re trading at $0.000012 instead of the more typical level of $1. If the Shiba Inu traded at $1 per token, it would be worth $589 trillion. This would make him the most valuable asset in the world. With a current value of $2.5 trillion, it will be worth 235 times more than Apple.
The huge supply of Shiba Inu is therefore a barrier to reaching a significantly higher price per token, according to the analyst. Speculators are slowly realizing that the token has probably been mathematically banished to a life with five zeros ahead of its price. Therefore, they have gradually stopped calling for meteoric price increases to $1 and beyond.
combustion problem
To solve the above supply issue, the Shiba Inu community is working together to “burn” the tokens out of circulation. This increases the price per token organically. Shiba Inu owners can contribute to my burn by listening to a certain music playlist, as we have also reported as Kriptokoin.com. They can also buy coffee from the Shiba Coffee Company, which burns some of the revenue. But the burn rate has been incredibly slow so far, according to the analyst.
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