Here's How Shiba Inu Can Surpass $1

Shiba Inu ( SHIB 3.70% ) posted a spectacular 45,000,000% increase last year. These days, though, the focus is less on potential percentage gains and more on the idea of hitting a big milestone. And that's the goal of reaching $1. Today, the token trades for only a fraction of a cent.

I've written about why it's going to be tough for Shiba Inu to reach that goal. But that doesn't mean it's impossible. In fact, there is a way Shiba Inu can make it to that point and higher.

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A major coin burn

A couple of things have to happen. First and foremost, a major coin burn -- or several major coin burns -- must take place. Burns put the coins out of circulation. And a smaller supply supports a higher price.

The bottom line is, today, there simply are too many Shiba Inu tokens out there to make an increase to $1 possible. The circulating supply right now is 549 trillion tokens. At a value of $1 per token, Shiba Inu's market value would be more than $549 trillion. That's bigger than the whole cryptocurrency market. And it's bigger than massive companies like Apple and Amazon. They're worth $2.7 trillion and $1.5 trillion, respectively.

Shiba Inu coin burns are happening. In fact, Bigger Entertainment -- a crypto entertainment company -- has been hosting burns. The latest was on Valentine's Day with a burn of about 370 million Shiba Inu tokens. That's a move in the right direction. But it isn't enough to make a dent in the enormous supply. A petition on change.org is calling for a Shiba Inu policy to burn a "significant amount of the token supply." So far, it has garnered about 18,200 signatures.

And this is a key ingredient in the recipe to reach $1: There must be a major decrease in token supply. This way, Shiba Inu could reach $1 without market value ballooning.

So that's the technical part of the problem. Now, let's get to how Shiba Inu can actually merit a value of $1 or more.

A way to stand out

Here, there are two options. First, Shiba Inu could reinvent itself to truly stand out from rivals. The problem today is it doesn't stand out. It's a token running on Ethereum. And uses are limited to trading or making payments at certain merchants. So, Shiba Inu can't host decentralized applications, for example. This limits its ability to shape the future of cryptocurrency.

Recently, Shiba Inu announced a project to build a layer-2 solution. This is to increase transaction speed and reduce costs. If Shiba Inu moves its tokens over to this network and is able to broaden its uses, there may be a chance for this player to shine.

The second option would be to make major gains in the metaverse. Shiba Inu recently said it would launch its metaverse project this year. Details are limited. But what we do know is users will be able to buy land in this virtual world. This is similar to what's already available through The Sandbox and Decentraland. So, it doesn't look like Shiba Inu truly is inventing something here. But if Shiba Inu's project gains traction -- and a lot of loyal users -- Shiba Inu may have reason to increase in value.

Now, the big question: Will all of this really happen? It's possible. But I don't think it's very likely. At least not likely enough to invest in this ultra-risky cryptocurrency today. Shiba Inu hasn't made any clear movement yet to cut its token supply. And upcoming projects haven't revealed any extremely original offerings. So, right now, it's best to favor cryptocurrency players that already are reshaping the worlds of business or entertainment.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.