After gaining an astronomical amount during its lifetime so far, it is easy to see why there’s a surge in the attractiveness of the Shiba Inu (SHIB-USD) cryptocurrency across the board.
Launched with an initial total supply of 1 quadrillion tokens, Shiba Inu gained global prominence in May 2021 when its creator, Ryoshi sent 50% of its total supply to Vitalik Buterin, the co-founder of the world’s second most capitalized cryptocurrency, Ethereum (ETH-USD). Surprised by the action, and at the same time saddled with the responsibility of making or destroying the entire project, Butering sent 90% to the dead wallet to be forever removed from circulation and donated 10%, estimated at about $1 billion at the time, to a Covid relief fund in India.
His action sent messages of hope and positivity at a period when the world needed it.
The Transformation of Shiba Inu
Started as a meme and internet joke inspired by a Japanese Dog, Kabosu, Shiba Inu unlike Dogecoin (DOGE-USD) has a total supply cap but not the halving methodology integrated into the Bitcoin project. Halving refers to the rewards of mining Bitcoin being halved every 210,000 blocks. Therefore, for SHIB to consistently reduce the total supply and simultaneously increase the value of the meme coin, a portion of it has to be intermittently sent to a burnt or dead wallet designated by the project creator.
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But because of its huge community and growing global reputation, a total of 410.303 trillion Shiba Inu, or 41% of its total supply, has been sent to the burnt wallet, leaving a total of 548.488 trillion in circulation and another 41.208 trillion staked on Shib program. The largest of all meme coins.
This large daily burn has helped bolster the value of the Shiba Inu coin by over 46 million percent at its peak in October 2021 before moderating to 26.5 million percent in recent months on concerns that the Federal Reserve will raise interest rates. Generally, a hawkish Fed stance is seen as negative for the cryptocurrency space, mostly because institutional inflows that have been sustaining the unregulated space naturally drop during rates hike. However, the ongoing Russia-Ukraine crisis has helped sustained the entire crypto space in spite of various reports and analyses pointing to a possible rate increase as early as March.
Here is the logic: the Russia-Ukraine crisis has pushed global uncertainties and risks off the roof, forcing global investors and traders to start gravitating towards safe-haven assets. That should help them curtail risk exposure while at the same time making profits in a tough period. But because crypto assets have started exhibiting characteristics of gold, investors may now prefer to invest their money in cryptocurrencies in a period of high uncertainty, given their huge potential returns.
Here is the twist — on Wednesday the Federal Open Market Committee (FOMC) minutes underscored the Fed’s readiness to raise interest rates next month. Russia, meanwhile, has said it does not plan to attack Ukraine. That stands in opposition to the U.S intelligence report that claimed the Eastern Europe nation has plans to attack its former province as early as last week. This was what reined in Shiba Inu’s price last week.
The Bottom Line on Shiba Inu
For Shiba and other cryptocurrencies to sustain their 2021 bullish momentum, the Fed has to hold off on rate hikes. Alternatively, if the Russia-Ukraine situation escalates, it would probably be good for SHIB. Therefore, for Shiba Inu’s potential or existing investors to really take advantage of the projected Fed induced decline, which I estimate could be about 50%, it is better to hold off on buying until after the Fed rate decision in March.
On the date of publication, Samed Olukoya held a long position in SHIB-USD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Samed Olukoya is a financial markets analyst with over two decades of experience. He founded Investors King and has worked with top business platforms across the world.
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