Why Shiba Inu is down today

There is no obvious news behind the move.

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A sad shiba inu dog looks up at the camera while lying on a mat on the floor with a tired look on his face.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Over the last 24 hours, the price of Shiba Inu (CRYPTO: SHIB) had fallen roughly 6% as of 1:55 p.m. ET today for no obvious reason, although investors look to be taking a breather after a strong rally in recent days.

So what

Last Thursday, Shiba Inu traded at $0.00000856 at its low for the day. On Friday and into the weekend, it rallied to $0.000014 and currently trades around $0.000012.

Last week was extremely volatile for cryptocurrencies as the price of Bitcoin briefly dipped below $26,000 multiple times while the collapse of the algorithmic stablecoin TerraUSD spooked investors. Shiba Inu outperformed Bitcoin last week.

Part of this could be related to Shiba Inu's recently launched burning portal tokens, which have begun taking tokens out of Shiba's current overall supply of more than 587 trillion tokens. Some believe this could help Shiba Inu's supply-and-demand dynamics and eventually drive the price higher.

Now what

Shiba Inu started as a meme-inspired cryptocurrency and while it has accumulated a decent market cap, I've never seen any appeal to the token from a fundamental investing standpoint.

It has no real technical advantage or real-world use case. It has an extremely large amount of tokens and if you thought Bitcoin was hard to value, then Shiba Inu is next to impossible.

Additionally, as the Federal Reserve continues to aggressively raise its benchmark overnight lending rate and begins unwinding its balance sheet, which effectively removes liquidity from the economy, investor appetite for riskier assets is likely to decline. I would expect this to be even more of a case for an asset like Shiba Inu, which is why I would recommend staying away.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Bram Berkowitz has positions in Bitcoin.The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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