Nvidia (NVDA 3.17%) just surpassed a $3.3 trillion valuation, making it the largest company in the world by market cap. If you bought shares at its initial public offering in 1999, you would be sitting on a 542,220% gain, which could have turned an investment of $200 into more than $1 million (assuming you never sold).
But an investment in meme cryptocurrency Shiba Inu (SHIB +0.69%) on Jan. 1, 2021, would have yielded a return of 45,278,000% by Dec. 31 of the same year. That's right: This speculative crypto could have made you a millionaire within 12 months from an outlay of just $3.
There is a distinct difference between the two investments. Nvidia generates earnings, and its stock trades at an all-time high, whereas Shiba Inu has little utility and it's down 80% from its best-ever levels from 2021.
With that said, sentiment is improving across the cryptocurrency landscape, and Shiba Inu has nearly doubled in value this year (albeit from a very depressed level). Can it stage another historic run from its current price of $0.000018 and climb all the way to $0.10?
CRYPTO: SHIB
Key Data Points
Shiba Inu will have to solve one of its biggest problems
It's very difficult for any digital currency to maintain its value without mass adoption. If consumers can't use it to buy goods and services, they have very little incentive to hold on to it -- unless, of course, they expect someone to come along and pay a higher price for it in the future.
Unfortunately, since only 940 merchants worldwide accept Shiba Inu as payment, according to the website Cryptwerk, its price is very much determined by speculators.
But value created through speculation can only last so long, which is a lesson investors learned the hard way if they bought the meme tokens near their peak in 2021. The Shiba Inu community is trying to create new uses for the token to incentivize ownership, in order to build longer-term value.
Developers introduced Shibarium last year, which is a Layer-2 blockchain solution designed to eliminate some of the clunkiness associated with the legacy Ethereum network upon which Shiba Inu is built. It makes the token more efficient and less expensive to use in transactions, although Shibarium doesn't appear to have moved the needle yet when it comes to adoption.
There is also a Shiba Inu metaverse in the works, where users will be able to spend tokens to add pictures, logos, and even rename their plots of virtual land. Progress appears to have stalled on the project, which was announced in 2022, and there is no firm release date.
Virtual reality is losing some of its shine, because even Apple is experiencing weak demand for its Vision Pro headset, and it has reportedly abandoned development of the next version. Instead, it will focus on releasing a cheaper model.
Image source: Getty Images.
At $0.10, Shiba Inu would be 18 times more valuable than Nvidia
Shiba Inu is far more valuable today than it was at the start of 2021, so a mathematical hurdle stands in the way of another substantial run higher. Based on the current price per token of $0.000018 and the outstanding supply of 589.3 trillion tokens, Shiba Inu has a market capitalization of $11.1 billion.
A gain of 555,455% will be required to reach $0.10 per token, but that would give Shiba Inu a market cap of $61.6 trillion. In other words, Shiba Inu would be more than 18 times more valuable than Nvidia. That doesn't sound realistic considering Nvidia is supplying the most advanced chips in the world for artificial intelligence (AI) development, which could be one of the most powerful technological revolutions in history.
Plus, the entire U.S. economy generated $28.2 trillion in gross domestic product (GDP) over the last 12 months, and I don't think there is any good argument in favor of Shiba Inu climbing to a value of more than twice that amount.
Simply put, it's going to be very hard for the token to generate further upside until it can find a sustainable use that will drive adoption. It's impossible to predict speculative price movements, so there's no telling when investor sentiment will turn negative once again. Even though Shiba Inu is trading in positive territory in 2024, I won't be surprised if those gains evaporate at some point.
