October has been a dramatic month for meme cryptocurrencies as two of the market’s most hyped-up assets rose to eye-watering levels.
Shiba Inu (CRYPTO: SHIB) and Dogecoin (CRYPTO: DOGE) are higher 40% and 1,000%, individually, over the last 30 days. However, investors should think about taking profits before this bubble bursts without compelling fundamentals to support the bull run.
Established in August 2020 by an anonymous developer named Ryoshi, the Shiba Inu token is meticulously designed to exploit popular dog memes on the internet. But notwithstanding its meteoric 60,000,000% increase after inception, the coin’s shortage of competitive advantages and risky investment community could place it at risk for a dramatic crash.
Shiba Inu’s October rally has limited fundamental support. As stated by Fortune magazine, the rush in buying may have begun when Tesla’s CEO Elon Musk tweeted a picture of his recently fostered Shiba Inu puppy on October 4. Later, a push for the tokens attached to Robinhood’s Market’s crypto exchange helped increase demand.
But notwithstanding the hype, Shiba Inu doesn’t bring much new to the table from a technical aspect. It is one of the above 460,000 ERC20 tokens that function on the Ethereum blockchain. And that indicates it will face Ethereum’s challenges. These include low transaction volume (13 per second), without having the strong brand and development team that holds Ethereum’s native token (ether) relevant, notwithstanding its technical deficiencies.
Dogecoin prices have risen 154,700% since the currency’s inception in 2013. And the once-satirical asset now possesses a market cap of $40 billion. But with growing competition from competing for meme coins and comparatively low fundamentals, it will fight to maintain its lofty valuation.
Unlike Shiba Inu, which is on the Ethereum network, Dogecoin is a stand-alone blockchain. Transactions go through a proof-of-work system. There miners solve computational puzzles to mint new coins (Ethereum and Shiba Inu also practice this system). But unlike newer cryptos, Dogecoin shouldn’t enable users to produce complex autonomous programs named decentralized applications (dApps).
The coin goes toward being a store of value and medium of exchange. But it is inadequately suited to those positions because of its inflation and volatility.
The supply of Dogecoin currently attains at 132 billion, with the number programmed to rise by 5 billion yearly — forever. This will reduce the coins’ worth over the long term if demand doesn’t match inflation. Dogecoin’s average 55-day holding time on Coinbase is significantly more distinguished than Shiba Inu’s 14 days. The coin has a track record of excessive volatility. This makes it inadequate as a medium of exchange because it imperils merchants to high exchange-rate risk.