Down 64% From Its High, Is Now the Perfect Time to Buy Shiba Inu?

Shiba Inu (SHIB -0.58%) has typically been one of the more popular meme coins among retail crypto investors. But it has been sliding in recent months, and the gap between it and meme-coin rival Dogecoin has been widening. Shiba Ina’s market cap of approximately $9.5 billion makes it the 13th-largest coin, while Dogecoin today holds down the No. 9 spot.

From the high of $0.00004564 it reached in early March, Shiba Inu’s valuation has plummeted by approximately 64%. (Dogecoin, meanwhile, is down by about 53% from the 52-week high it touched in March.) Although investor interest in Shiba Inu seems to be at a low ebb, could now be an opportune time for crypto investors to start loading up on it?

Crypto’s catalysts have evaporated

At the beginning of 2024, there was a lot of excitement across the crypto market about the looming Bitcoin halving event. Plus, there was growing bullishness regarding the Securities and Exchange Commission’s approval of new spot Bitcoin exchange-traded funds (ETFs), making it easier for people to invest in the digital currency without worrying about digital wallets. There’s also been speculation that Shiba Inu will get its own spot ETFs.

But all that bullishness appears to have fizzled out. A strong U.S. economy combined with persistent inflation a percentage point or two above the Federal Reserve’s target range has made it less likely that the central bank will engage in multiple interest rate cuts this year, and higher interest rates for longer is bad news for speculative assets like cryptocurrencies. Meanwhile, investors are growing more concerned about the possibility of a bubble forming in the stock market. That idea also appears to be putting a drag on the crypto market.

While meme coins like Shiba Inu and Dogecoin are well off their highs, the same can be said for Bitcoin, which is down by about 24% from its peak. Bitcoin is the larger, more stable cryptocurrency, so it’s in a better position to face market and economic headwinds.

Shiba Inu still trades well above where it started the year

The silver lining for longer-term crypto investors is that Shiba Inu is still trading well above where it was at the start of the year. On Jan. 1, the meme coin opened at a price of $0.00001034, which would put its year-to-date gains at 56%.

There are catalysts that could help restore the meme coin’s momentum. For example, the launch last year of Shibarium — a Layer-2 blockchain network — could attract more developers to its network, in that it can help speed up transactions and reduce transaction fees. But this will ultimately be a differentiator between it and other meme coins. In the big picture, for a sustained rebound to occur, there needs to be greater interest in crypto in general, and that’s where interest rate cuts come in. If there are signs that the Fed will start easing the federal funds rate back down, that could give Bitcoin and other cryptos a big boost. High interest rates can drive investors away from speculative investments such as cryptos, which is why cutting them can have a potentially positive impact.

Investors shouldn’t expect a rally from Shiba Inu anytime soon

Shiba Inu’s valuation is down, but there are no near-term catalysts visible on the horizon that can be expected to turn things around rapidly. This volatile cryptocurrency is a highly risky investment, and it isn’t going to be suitable for the vast majority of investors.

While it may be tempting to assume that it’s “due for a rebound” after its recent decline, that could be a costly assumption to make. It may not be until rate cuts begin that Shiba Inu and other cryptocurrencies start to gain traction again. And even then, that tailwind may not necessarily provide them with a long-term boost.

If you want to invest in crypto, buying a Bitcoin ETF may be a more appropriate choice, as that option carries a lower level of risk.