Volatility has always been a feature of the cryptocurrency markets. The collective value of all coins and tokens in existence recently hit an all-time high of nearly $3.9 trillion, but the market is in correction territory again, with a 12% drop as of this writing. Investors might remember when the industry suffered a 71% loss in value around one year after its previous major peak in 2021.
Some individual cryptocurrencies are performing even worse than the broader market right now, though. Meme-token Shiba Inu (CRYPTO: SHIB) was sitting on a year-to-date gain of 251%, but it has since plummeted 41% from its 52-week high.
Shiba Inu staged an incredible run in 2021 when it delivered a return that could have grown a mere $3 investment into over $1 million. That episode ended with a collapse in value of more than 90%, so is the recent dip the start of something worse or an opportunity to buy before another historic rally?
Shiba Inu reached an all-time high of $0.000086 in 2021, and it ended that year with a total gain of 45,278,000%, which remains one of the best annual returns in the history of financial markets.
As I mentioned earlier, Shiba Inu lost most of its value after that run, so its strong gain in 2024 was an encouraging sign that a recovery might be in the cards. However, even at its recent 52-week high of $0.000036, it hadn't even clawed back half of its peak value from 2021.
As it turns out, the latest rally was driven by another dose of speculation fever. Shiba Inu doesn't have any utility -- it's only accepted as payment for goods and services by 1,025 businesses worldwide (according to Cryptwerk), and many of them are obscure internet businesses, providers of crypto services, and online gambling houses.
Developers have tried to create new use cases for Shiba Inu, and they even launched Shibarium, which makes the token cheaper and more efficient to use in transactions. However, its price swings primarily on the whims of speculators, who buy it in the hope that someone is willing to pay a higher price in the future.
Trump's election win on Nov. 5 was the spark that ignited the latest rally across the crypto markets, including in speculative tokens like Shiba Inu. He will lead the most pro-crypto administration in U.S. history, and investors think a lighter regulatory environment will pave the way for new opportunities to create value.
Outgoing Securities and Exchange Commission (SEC) chairman Gary Gensler was a crypto critic, and Trump recently nominated crypto advocate Paul Atkins to replace him (pending Senate approval). That will trigger a massive shift in the way America's top financial markets watchdog approaches the crypto industry.