What happened

Most cryptocurrencies and crypto stocks continued to plunge today as the industry deals with the fallout from the events in recent days that ultimately led the large crypto exchange FTX to agree to sell its non-U.S. operations to Binance.

Over the past 24 hours, shares of the world's second-largest cryptocurrency, Ethereum (CRYPTO: ETH), traded more than 24% lower as of noon today. Shares of the meme tokens Shiba Inu (CRYPTO: SHIB) and Dogecoin (CRYPTO: DOGE) traded more than 16% and 23% down, respectively.

So what

In recent days, there have been rumors questioning the solvency of FTX after a scathing report from the news website CoinDesk said that the crypto exchange's sister trading firm, Alameda Research, had a large number of its total assets in the cryptocurrency FTX Token (CRYPTO: FTT).

FTT is the in-house cryptocurrency created by FTX. The concern was what would happen to both Alameda and therefore FTX, because of how tied the two companies were, if the price of FTT fell. Furthermore, there were concerns about whether FTT was being used as collateral in any way. Not that it matters as much now, but the price of FTT is down more than 78% over the last 24 hours.

On the news of Alameda, Binance's CEO Changpeng Zhao announced that he would liquidate $2 billion of his FTT holdings, which started the concerns about FTT's price holding up and the impact on FTX and Alameda.

While FTX CEO Sam Bankman-Fried tried to calm these fears, taking to Twitter to say that FTX's balance sheet was sound, customers began to withdraw their funds from FTX; the crypto exchange said it saw $6 billion of withdrawals in 72 hours. This eventually led Bankman-Fried to turn to Zhao and sell FTX's non-U.S. operations to shore up the liquidity crunch the company was facing.

But the deal is pending due diligence, and there are already media reports, including one from CoinDesk citing anonymous sources, suggesting Binance might not end up going through with the deal. This whole series of events has shaken the faith in the entire crypto industry, similar to other big crypto meltdowns like that of algorithmic stablecoins.

"It shows that no one is too big to fail," Pascal Gauthier, CEO of crypto wallet firm Ledger, said on CNBC. "FTX seemed untouchable."

This also could hurt the resolve of the general public and reduce investing activity if people are skeptical about the large crypto exchanges and believe that they lack stability.

Now what

I don't know if the events over the last few days have affected my view of specific cryptocurrencies, but more so reflect the erratic nature of the industry as a whole and how it is still very much the Wild West.

FTX played an important role in the industry, so to see it go down so quickly -- and to realize some of the issues it likely had -- are going to raise a lot of questions.

Ultimately, my view hasn't changed on these three cryptocurrencies. I still like Ethereum at these levels and think the token has great long-term potential because of all of its real-world uses. The recent upgrades to the network should also greatly help Ethereum scale as well.

I am still not a fan of Dogecoin or Shiba Inu due to their lack of real-world utility and the lack of technical capabilities on each of their perspective networks.

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

The post Why Ethereum crashed today appeared first on The Motley Fool Australia.

What happened 

Elon Musk has owned Twitter for less than a week and he's already caused volatility to spike in some corners of the crypto market. It's no secret that Musk has long toyed with using Dogecoin (CRYPTO: DOGE) in some way in previous ventures and the speculation is that he'll use it at Twitter, albeit without any facts to back up wild moves. 

That hasn't stopped traders from bidding up potential winners of the Twitter deal on Monday. Dogecoin is up 10.6% in the last 24 hours as of 2:30 p.m. ET but at one time was down 10.3% in the last day, BNB (CRYPTO: BNB) is up 3.8% after falling 5.6%, and Shiba Inu (CRYPTO: SHIB) is up 3.1% after dropping 5.1% at its low. 

So what 

I'll start with what we know to be true. Binance was part of Twitter's funding, contributing about $500 million to the deal. It's not clear exactly what Binance CEO Changpeng Zhao sees in Twitter, but there are many potential opportunities. He said recently that Twitter users could be charged "very easily globally using cryptocurrencies" for services on the app. It's also been widely reported that Twitter's engineers are quickly developing a paid verification system. 

BNB, Dogecoin, and Shiba Inu are all rising on speculation that they could be part of any Twitter payment infrastructure. But there's still no news out from Twitter, Musk, or any of these tokens about any payment infrastructure existing at all. And even if they did, it's not clear that a company like Twitter using a cryptocurrency to get money from one person to another would actually increase the value of the token itself. 

Unsurprisingly, the move in these cryptocurrencies over the past week has been pure speculation, sparked by their association with Musk. But that's part of the cryptocurrency market and that's likely to be the case for the foreseeable future. 

Now what 

Volatility and speculation are part of investing in cryptocurrencies, but the moves in BNB, Dogecoin, and Shiba Inu over the past week have taken that to another level. 

Even if Twitter does begin using cryptocurrencies more, it's likely to start with more conservative cryptocurrencies like USD Coin (USDC), which it is already testing on the Polygon blockchain. The company partnered with Stripe earlier this year to allow creators to take payments in USDC, lowering barriers for international payments. 

There are other blockchains that would be lower cost and more widely accepted than BNB, Dogecoin, and Shiba Inu, which are still relatively niche tokens right now. 

No matter what Twitter's moves are, I'm not sure there's ultimately a lot of value to be added by cryptocurrencies. I don't think the future of Twitter is building a digital economy, but rather moving money more efficiently around the world. Crypto could simply be how Twitter moves its money, not necessarily something users would hold long-term. That's why I think this speculative move is a reason to stay out of these cryptocurrencies until we know more about Twitter's crypto future. 

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

The post How Elon Musk caused Dogecoin, Shiba Inu, and BNB to spike again on Monday appeared first on The Motley Fool Australia.

After a monster return in 2021, dog-inspired cryptocurrency Shiba Inu (CRYPTO: SHIB) has come crashing back to Earth. In 2022, SHIB, the native token, has lost 68% of its value (as of this writing). General weakness in the overall crypto market, coupled with more realistic expectations about this specific digital asset, are the reasons for the price drop. 

After all this, Shiba Inu is still the 14th most valuable cryptocurrency, with a market value of $6.1 billion. But can it one day reach $1 per token from today's $0.000011? Continue reading to find out if Shiba Inu can make its biggest supporters rich along the way. 

What is Shiba Inu? 

Seeing limitations in how Dogecoin was structured, the anonymous founder of Shiba Inu wanted to add greater functionality, so it was built on top of the Ethereum network. This makes it compatible with the Ethereum ecosystem, a strategy that was designed to draw more interest from developers and users in the crypto world. 

Shiba Inu's initial supply of 1 quadrillion tokens (that's 15 zeroes) is absolutely mind-boggling. Half of this amount was sent to Ethereum co-founder Vitalik Buterin, who sold $1 billion worth to donate to India's pandemic relief fund. Buterin then burned, or sent to a dead wallet, another 40% of the tokens. These moves helped bring Shiba Inu into the spotlight. 

However, Shiba Inu has no real competitive advantage in the world of cryptocurrencies, and there are more promising projects like Ethereum and Cardano when it comes to use cases like decentralized finance and non-fungible tokens. These blockchains also have attracted much greater interest from speculators, users, and developers. This makes the possibility of Shiba Inu ever reaching $1 very unlikely. 

Why a $1 price target is unlikely 

There are three specific developments that could help push up SHIB's price. Continuing to burn tokens, as Vitalik Buterin did, is one of these catalysts. The premise of this tactic is that reduced supply, coupled with higher demand, will boost SHIB's price. I see this as nothing more than financial engineering. And with such a gargantuan supply of tokens, 549 trillion to be exact, a lot of burning would need to happen. 

Another catalyst is the development of the network. A Layer-2 solution, known as Shibarium, is supposedly in the pipeline as a way to increase the functionality of the network while lowering transaction fees. Additionally, ShibaSwap 2.0, an upgraded decentralized exchange, and a Shiba Inu metaverse are in the works. The overarching goal is to bring on more users, which would support demand for SHIB and drive up its price. But again, these updates can't compete with Ethereum's dominance. 

And lastly, like many meme-inspired cryptocurrencies, Shiba Inu's price could receive a boost by way of another huge hype cycle on social media. This has propelled other cryptos, most notably Dogecoin, to prominence. But it isn't something to bank one's hard-earned savings on. Trying to predict a specific cryptocurrency's price moves based on how much buzz it might get on the internet seems like an impossible task. 

If Shiba Inu were ever to reach $1 per token, this would mean that the cryptocurrency network's entire market value would be a whopping $549 trillion. That's more than the amount of total global wealth, as estimated by consulting firm McKinsey & Co. Clearly, this aspirational price target is all but impossible.  

Buying SHIB today would be akin to gambling, and therefore, it's best for investors to stay away from this token. 

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

The post Can Shiba Inu reach $1? appeared first on The Motley Fool Australia.

Shiba Inu (CRYPTO: SHIB) hit almost every investor's radar in 2021 after speculators drove it to a 43,800,000% gain for the year. It's one of the greatest returns in the history of finance -- a perfectly timed investment would have turned a mere $3 into over $1 million. 

But the tide has since gone out, and Shiba Inu hasn't evolved to deliver any real use cases. As a result, it has declined in value by 64% in 2022 so far. Despite the steep drop, here are five big reasons I still wouldn't be a buyer. 

1. Shiba Inu is unregulated

The first reason to stay away from Shiba Inu -- and this goes for most cryptocurrencies -- is that it's completely unregulated. Ironically, that's one reason some investors choose to own it, because they feel it keeps them outside of the traditional monetary system. But there can be significant consequences to that approach.

For example, if Shiba Inu tokens are lost or stolen, there's virtually no recourse for the holder whatsoever. On the other hand, up to $250,000 worth of cash in a U.S. bank account is automatically insured by the Federal Deposit Insurance Company (FDIC); in other words, it's guaranteed by the government should anything happen. 

It's probable that holders of TerraUSD, a stablecoin that recently shed almost all of its $18 billion valuation, would have appreciated a government-backed initiative to recover their losses.

2. Regulations are coming

You might think this is contradictory to the first point, but the second reason to avoid Shiba Inu is because regulation is inevitable. After a string of high-profile collapses in the cryptocurrency markets (like the one mentioned above), the U.S. government is more aggressively pursuing new laws to protect investors.

Shiba Inu holders (and crypto holders broadly) will soon lose their ability to remain anonymous, because their brokers and exchanges will be required to report all client trading activity to the Internal Revenue Service for tax purposes beginning in 2023. In addition, the majority of cryptocurrencies likely fit the legal definition of a financial security, which could soon place a heavy compliance burden on brokers and exchanges, and that will increase trading costs for customers.

Put simply, more regulation is a net positive for consumers, but it would also strip away many of the reasons people want to own tokens like Shiba Inu. If the subset of the population who currently find Shiba Inu appealing suddenly no longer do, then it might be the final nail in the coffin for the meme token. 

3. Neither consumers nor businesses want to use Shiba Inu tokens

The ultimate goal of most cryptocurrencies is to become a means of payment that performs better than traditional money. Theoretically, that would ensure sustained price gains because people would constantly be transacting in the tokens, giving consumers and businesses an incentive to own them. But so far, not even crypto market leader Bitcoin (CRYPTO: BTC) has garnered mass adoption, and Shiba Inu is lightyears behind. 

Roughly 7,879 businesses accept Bitcoin as payment worldwide, but a mere 659 accept Shiba Inu, and they're mostly small, obscure merchants. Given the significant return Shiba Inu delivered in 2021, followed by its subsequent collapse in 2022, how many businesses could manage their cash flow if they transacted in such a volatile currency? Probably none. 

As a result, it's unlikely Shiba Inu's merchant base will grow materially anytime soon.

4. Shiba Inu has a supply problem

Now that it's been established that Shiba Inu is merely a speculative plaything, here's the fourth reason I wouldn't touch it with a 10-foot pole: It's not even good at that. There are currently 589 trillion Shiba Inu tokens in circulation, which is why they trade at a price of $0.000012 each instead of something more typical, like $1. 

If Shiba Inu did trade at $1 per token, it would be valued at $589 trillion, making it the most valuable asset on Earth. It would be worth 235 times more than iPhone maker Apple Inc. (NASDAQ: AAPL), which is currently the largest company in the world, with a market capitalisation of $2.5 trillion. 

Shiba Inu's enormous supply is therefore a barrier to it ever reaching a significantly higher price per token. As speculators have slowly realized the token is likely mathematically banished to a life with five zeros in front of its price, they've gradually stopped calling for further meteoric price increases to $1 and beyond. 

5. I'm not feeling the burn

To solve the above supply issue, the Shiba Inu community is working together to remove tokens from circulation by "burning" them, which organically increases the price per token. This happens by sending tokens to a dead wallet where they can never be accessed again. The easiest way to participate is to simply send tokens to the aforementioned wallet, but that's no fun.

Shiba Inu holders can also listen to a specific music playlist where the royalties are partially burned, or they can buy coffee from the Shiba Coffee Company, which burns some of the proceeds. Then there's the new Shiba Inu metaverse, where users who purchase virtual land using the Ethereum (CRYPTO: ETH) cryptocurrency can pay a fee in Shiba Inu to rename their plots and, you guessed it, that fee is burned. 

But the burn rate has been incredibly slow so far. If holders are hoping to see their tokens reach $1 through the burn mechanism, they might be waiting more than 10,000 years. And, even if it gets there, it won't change the value of their holdings. Each Shiba Inu investor will simply own fewer tokens at a much higher price, so the net worth of those tokens will remain exactly the same.

Therefore, while this feels like a positive solution, it will have little real impact for investors.

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

The post 5 reasons I wouldn't touch Shiba Inu with a 10-foot pole appeared first on The Motley Fool Australia.

Shiba Inu (CRYPTO: SHIB) skyrocketed to fame as a popular meme coin with little to no intrinsic value. You simply bought the coin because it featured a cute dog as a mascot, and it only seemed to go up in value.

For an almost comically low price of $0.000012, you, too, can still own a cryptocurrency with seemingly unlimited upside potential. But there is just one problem: The cryptocurrency launched with a massive supply of one quadrillion coins (a one followed by 15 zeros).

To put that into perspective, the current circulating supply of Ethereum (CRYPTO: ETH) is 122 million coins. The maximum total supply of Bitcoin (CRYPTO: BTC) -- ever -- will be 21 million coins. It's evident that Shiba Inu has a problem with oversupply -- one quadrillion is an insanely high number. There's too much supply of Shiba Inu and not enough demand. Until it dramatically reduces the number of coins, its price has limited upside potential. 

Burn, baby, burn

For that reason, I've increasingly come to realize that there is only a single metric that should be used to value Shiba Inu: burn rate. This refers to the rate at which users are burning Shiba Inu tokens. The higher the coin burn rate, the better.

"Burning tokens" does not imply that people all over the world are holding massive bonfires. It simply means they are permanently removing tokens from circulation by transferring them to a "dead" wallet where the private cryptographic keys have been thrown away. 

Looking at the total supply of Shiba Inu today, you might be puzzled to see a figure of 589.6 trillion coins. That would seem to imply that 410.4 trillion coins have already been burned. But that's really due to the efforts of a single person, Vitalik Buterin, co-founder of Ethereum.

The anonymous founder of Shiba Inu, known as Ryoshi, sent Buterin nearly half the supply of Shiba Inu as a gift back in 2020. Buterin promptly turned around and burned 410 trillion tokens. And it wasn't easy, either. Burning that much worthless digital currency actually requires quite a bit of planning.

Shiba Inu burn calculations

Luckily, there are now publicly available sources that let you know how much Shiba Inu is being burned these days. According to estimates, 300 million tokens were burned in the first week of September alone. In one spectacular 24-hour period, over 100 million tokens were burned. In September, the average burn rate is now 23.67 million Shiba Inu tokens per day, which is up more than 138% from the average daily rate in August. 

No matter where you look these days, it seems like people are talking about ways to burn Shiba Inu. They have realized that an initial circulating supply of one quadrillion coins has devalued the currency. Burning is the only way to bring supply and demand back into balance.

The logic is simple: More Shiba Inu has to burn for it to become valuable. Maybe I'm being too cynical about its future, but it's hard not to see every new project launched by the Shiba Inu community as a clever way to burn tokens and get them out of circulation. 

How much Shiba Inu still needs to burn?

So, the big question is: How much more has to burn before SHIB becomes a buy? Assuming a market capitalization of $7 billion, which is what it is valued at today, if Shiba Inu ever wants to reach the $1 mark, it would have to reduce the total supply to around seven billion coins. But, again, the total circulating supply was so insanely high at launch, that reaching that seven billion mark will be difficult. Shiba Inu would need to burn more than 99% of all its existing coins to get supply and demand back into balance. 

So that's why the only metric that matters anymore is burn rate. I don't want to hear about new apps, new scaling solutions, or new metaverse projects unless they offer new ways to burn tokens.

Once the massive oversupply of Shiba Inu tokens is under control, that's when I might decide to get back into the market for what has become an extremely devalued cryptocurrency.

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

The post Is Shiba Inu a buy? This one metric holds the answer appeared first on The Motley Fool Australia.

What happened

Most cryptocurrencies are falling today along with tech stocks, as investors gear up for key inflation data tomorrow that has the potential to move markets in a big way.

Over the last 24 hours, the price of the world's largest cryptocurrency, Bitcoin (CRYPTO: BTC), had fallen roughly 4% as of 2:49 p.m. ET today. In that same time frame, the price of the world's second-largest cryptocurrency, Ethereum (CRYPTO: ETH), had fallen roughly 5%, and the price of meme token Shiba Inu (CRYPTO: SHIB) traded nearly 8% lower.

So what

Tomorrow morning, the U.S. Bureau of Labor Statistics (BLS) will unveil July data for the Consumer Price Index (CPI), which tracks the prices of a wide range of consumer goods and services. Investors use it as one way to gauge inflation. In June, the CPI surprised the market, rising 9.1% year over year. But investors were relieved to some extent because a big chunk of the gain had come from a rise in energy and gasoline prices, which started to come down in July.

Economists are expecting an 8.7% year-over-year increase for July, reflecting the drop-off in energy prices, but investors will also be hoping to see other price categories fall as well, whether it's transportation, food, or rent. 

If the CPI comes in at 8.7% or below, there is a decent chance the market reacts favorably because it could mean that inflation is peaking, which may allow the Federal Reserve to ease off a bit when it comes to hiking interest rates. If the CPI comes in above 8.7% the market may not react so favorably. Rising rates have crushed the likes of Bitcoin and other cryptocurrencies this year because higher rates make risky growth assets less appealing, and crypto had been on a tear in 2021.

But investors are starting to think that the worst may now be behind crypto. JPMorgan Chase analyst Kenneth Worthington recently said in a research note that crypto has "found a floor despite trading volumes still being depressed."

Worthington attributes this to investors settling down after the collapse of the algorithmic stablecoin TerraUSD and now being less worried about the impact on the broader crypto market. In addition, investors also seem to be excited about a series of ongoing upgrades to Ethereum's network that are expected to drastically improve the network, which may be completed sometime this year.

Now what

While crypto seems to have stabilized in recent weeks, it still seems to be trading with some correlation to tech stocks, as evidenced by today's trading activity and investors' anxiety over the CPI report tomorrow.

I do think if the CPI comes in worse than expected and stocks fall, Bitcoin could go lower and fall back to some of the annual lows it was seeing in June. If the CPI comes in better than expected, that likely has a good chance to send crypto prices higher.

Long term, I do see Bitcoin and Ethereum as good investments, given their growing acceptance across the globe and in the mainstream financial system. I have no interest in meme token Shiba Inu because it does not have any practical use cases or technical advantages over other cryptocurrencies.

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

The post Why Bitcoin, Ethereum, and Shiba Inu are falling today appeared first on The Motley Fool Australia.

What happened

Shares of most cryptocurrencies fell over the weekend as digital assets and stocks prepare for what could be a turbulent week, with the Federal Reserve set to hold its July meeting, another big interest rate hike in store, and more important economic data due out later this week.

Over the last 24 hours, the price of the world's largest cryptocurrency, Bitcoin (CRYPTO: BTC), had fallen about 2.6% as of 9:13 a.m. ET Monday. The price of Ethereum (CRYPTO: ETH) was down more than 3%, and the meme token Shiba Inu (CRYPTO: SHIB) had fallen 3.5%. 

So what

Like many tech stocks and riskier assets this year, crypto prices have taken a beating as inflation has soared this year and the Federal Reserve has rapidly increased its benchmark overnight lending rate, the federal funds rate. Riskier assets typically do not fare well in the face of rising interest rates because the yields on safer assets rise, demanding more from the earnings and returns of growth assets, which previously traded at premium valuations.

On Wednesday, the Fed's rate-setting committee is widely expected to raise the federal funds rate by another 75 basis points (0.75%), but investors will be looking for clues in the Fed's comments about how the Fed views the economy and future rate hikes for the rest of the year. A more hawkish Fed would likely spell trouble for the stock market and crypto prices. However, if the Fed feels more comfortable about the state of inflation and future economic prospects, asset prices might respond favorably. 

"However this week plays out, I suspect today will be the most sedate day of the week to come [for crypto]," Oanda analyst Jeffrey Halley wrote in a recent research note.

Along with more earnings reports, another big event that could impact crypto and broader market activity will occur on Thursday, when the U.S. Bureau of Economic Analysis releases its estimate for gross domestic product (GDP) growth for the second quarter of the year.

In the first quarter of the year, U.S. GDP fell by 1.6% after growing nearly 7% in the fourth quarter of 2021. Two straight quarters of negative GDP growth technically signals a recession. Goldman Sachs earlier this month trimmed its GDP estimates for Q2 to roughly 0.7%, which would keep the U.S. just barely out of a technical recession.

With a strong labor market and most large U.S. banks reporting strong consumer spending in Q2, it doesn't really feel like the U.S. economy tipped into a recession, but the market may see the slowdown as just beginning, which may not be so favorable for riskier assets like cryptocurrencies.

Now what

In the near term, I could see crypto prices going in either direction. A less hawkish Fed and better-than-expected GDP growth in Q2 could signal to the market that the Fed might be able to tame inflation and engineer a softer landing than many have envisioned in recent months.

That would likely bode well for crypto prices. But more hawkish comments and weak economic data may result in movement downward.

Either way, I still view Bitcoin and Ethereum as good long-term investments given their growing adoption all over the world and real-world use cases. Shiba Inu does not appear to have any technical or fundamental investment thesis, which is why I would avoid the meme token. 

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

The post Why Bitcoin, Ethereum, and Shiba Inu are falling today appeared first on The Motley Fool Australia.

What happened

Today, cryptocurrency investors are seeing some consolidation following a rally this week that brought the crypto sector above the important $1 trillion valuation mark. With the overall market down 5.5% over the past 24 hours as of this morning's session, it's clear some profit taking is in order after a rather rosy start to this week.

However, for meme token investors, today's decline has been much more steep. Shiba Inu (CRYPTO: SHIB) and Dogecoin (CRYPTO: DOGE), two of the most prominent meme tokens, dropped 10.1% and 8.5%, respectively, over the past 24 hours as of 10:45 a.m. ET. Other meme tokens that have gained in popularity with investors of late, such as ApeCoin (CRYPTO: APE) and STEPN (CRYPTO: GMT), also saw double-digit declines over the same time frame. 

Accordingly, many investors may be asking, "What gives?"

Well, today's decline actually began yesterday afternoon, following a rather interesting Tesla (NASDAQ: TSLA) earnings call. CEO Elon Musk noted he sold 75% of his Bitcoin (CRYPTO: BTC) holdings over the past quarter, in a bid to boost the company's liquidity in the face of supply chain issues and other macro factors. While Musk also reiterated his support for Bitcoin over the long term on the call, suggesting he may add to his position in the future, the electric vehicle maker did previously retract the ability for the token to be used as payment for Tesla vehicles following a short-lived experiment.

Musk also stated that Tesla hasn't sold any of the Dogecoin it holds. How much is held, and whether this token will be used for anything other than merchandise sales in the future, remains uncertain.

So what

Musk's massive Bitcoin divestiture sent a pretty strong signal to the market that Tesla's view of Bitcoin as a long-term investment has shifted. In a tweet he sent in May of last year, he noted, "Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy." As with anything Musk says, investors who didn't take these comments with a (big) grain of salt have been disappointed.

That said, his apparent support for Dogecoin (relative to Bitcoin) is notable. In previous interviews, Musk has indicated that his support for meme coins has been driven by a feeling that he's helping out smaller investors by remaining bullish. Whether that's an indication this bullish stance will hold forever or -- like his views on Bitcoin -- is a moving target remains to be seen. 

Today's price action among most cryptocurrencies, and especially meme tokens, suggests the market isn't buying any of it.

Now what

The fact that a single man can have such an impact on a $1 trillion sector is rather incredible. Investors considering any of these highly volatile digital tokens ought to consider that reality before jumping in. Indeed, Musk's unpredictable nature adds to the potential volatility these tokens could see moving forward. 

Given where we're at in the market cycle, and the macro headwinds that remain, today's sell-off appears to be warranted. I'm sure meme token investors will be watching how Musk pivots from here. If one thing is certain, it's that nothing is a sure thing in the world of memes. 

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

The post Did Elon Musk's comments support or hurt meme tokens? appeared first on The Motley Fool Australia.

What happened

The positive momentum in the cryptocurrency space we've seen to start this week is showing no signs of slowing. As sentiment related to the broader market continues to take a bullish tone, investors are seeing some impressive intraday moves in popular tokens. This is evidenced by today's 24-hour moves in meme tokens Dogecoin (CRYPTO: DOGE) and Shiba Inu (CRYPTO: SHIB), which surged 6.6% and 5.6%, respectively, over the past 24 hours as of 12:20 p.m. ET. Cardano (CRYPTO: ADA) also saw an impressive move higher, gaining 4.4% over the same period. 

These moves appear to be driven by a changing narrative in the crypto sector. Yes, all the same headwinds continue to plague digital currencies right now. The Federal Reserve still appears to be looking to aggressively quash inflation and shrink the money supply. For investors, higher-risk assets are vulnerable to devaluation in such an environment. 

However, the recent announcement that the highly anticipated Ethereum merge has a tentative date of Sept. 19 in place has provided investors with something positive to look forward to. With that and moves by other networks such as Cardano, which is undertaking its own Vasil hard fork upgrade, optimism around key upcoming catalysts appears to be drowning out the rather loud negative catalysts that have reigned supreme this year.

So what

Aside from hard-core crypto maximalists, Dogecoin and Shiba Inu are two meme tokens that are generally viewed as too speculative to touch. However, one important feature these tokens provide is insight into the overall mentality of retail investors, as well as a gauge of investor sentiment more broadly. When speculators feel that a momentum-driven rally may have legs, tokens that are more volatile are often sought out as trades to capitalize on short-term moves.

Thus, when we see Dogecoin and Shiba Inu make multiple substantial daily moves higher (in sequential fashion), the speculative juices start to flow once again. Those betting on another bull market being just around the corner have been looking for such indicators for some time.

Indeed, the Ethereum merge has been a highly discussed event in the crypto sphere for a while. This catalyst, which has been delayed multiple times, is often viewed as what may take the future of decentralized finance, non-fungible tokens, and other crypto-related segments to the next level. As a core piece of the infrastructure supporting the overall crypto ecosystem, that's a good thing for all tokens. 

Now what

This week's impressive rally, as always, needs to be put in context. The overall crypto market, which is hovering around a $1 trillion valuation, is down approximately two-thirds from its peak of approximately $3 trillion late last year. Thus, while it's great to get excited about near-term price action with some popular cryptocurrencies, much more of the same will be needed to erase the incredible losses we've seen this year.

Additionally, it's unclear just how long traders and speculators will continue to bid up various cryptocurrencies before taking profits. The pump is great, but the dump is often not. And while many may stick around regardless of the volatility (those true long-term investors out there), traders and speculators will likely pull the plug at some point. 

Accordingly, true long-term investors may want to be patient with this recent rally. We're seeing a similar theme play out in the stock market, with many calling this a bear market bounce. We'll only find out later whether this was a sustainable rally off the bottom, or another head fake. But for now, playing it safe and incorporating appropriate risk management protocols in one's investing strategy appears to be the best way forward. 

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

The post Does this crypto rally have legs? appeared first on The Motley Fool Australia.

What happened

The entire cryptocurrency market is rallying today, with more defensive and higher-beta tokens trading higher almost in lockstep. For meme tokens Shiba Inu (CRYPTO: SHIB) and Dogecoin (CRYPTO: DOGE), 24-hour price increases of 15% and 6.5% as of 12:45 p.m. ET, respectively, reflect increasingly bullish sentiment in the crypto sector. As a gauge for retail investor interest, these tokens are often looked to as directional indicators of where the market may be headed. 

Shiba Inu's surge appears to be related to a recent community vote to reduce mining rewards with the network's upcoming Layer 2 blockchain, Shibarium. Similarly, Dogecoin is seeing interest surge ahead of its Dogecoin Core 1.14.6 release, which is intended to harden node and network security while also incorporating fixes and adjusting rewards on the network.

Solana (CRYPTO: SOL), while not a meme coin in its own right, does have one meme token on its blockchain investors are watching. Solana-based Samoyedcoin is also up approximately 7% over the past 24 hours, at the time of writing, as investors look for high-leverage options to gain exposure to this crypto rally today. 

So what

Amid the fallout from other high-yielding projects, and those offering rewards many now view as unsustainable, the moves Shiba Inu and Dogecoin have made to reduce rewards and focus on network stability certainly make sense.

The saying "if it's too good to be true, it probably is" has taken on a whole new meaning in the crypto world. At the end of the day, rewards come from somewhere, and whether it's inflation from minting new tokens, or Ponzi-like structures that only work when prices go up, crypto investors certainly have reason to worry about projects over-offering rewards.

Now what

Meme tokens remain among the most volatile and high-risk assets investors can consider for their portfolios. While there's certainly more developer activity being seen with the likes of Shiba Inu, Dogecoin, and other projects, the ultimate valuation investors can place on the real-world utility generated from these projects likely remains negligible. Accordingly, aside from bullish investor sentiment, there really aren't many fundamental drivers that can take these tokens higher over the long term.

That might change, but for now, investors may want to view these tokens as ultrasensitive gauges of investor sentiment. In today's session, that means some nice near-term rallies in these tokens. However, if the selling pressure isn't over, investors may want to prepare for more downside risk in the medium term with these dog-inspired tokens. 

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

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What happened

Over the past 24 hours, the price of the meme token Shiba Inu (CRYPTO: SHIB) has jumped roughly 27% as of 10:30 a.m. ET for no obvious reason, although the crypto market is rebounding today after what has been a brutal sell-off as of late. 

There are also a few other recent events that show how Shiba Inu continues to gain traction among the crypto and investing community.

So what

Some are touting a new milestone for Shiba Inu because the token recently reached 3.4 million followers on Twitter, which is now tied with Shiba Inu's rival Dogecoin.

Both are meme tokens and very similar, so investors may view this as Shiba Inu starting to catch up to Dogecoin. Dogecoin currently has a bigger market cap, but it's definitely within reach. 

Another interesting phenomenon is that Ethereum whales, investors that on average own $14 million in their crypto wallets, seem to be growing more and more interested in Shiba Inu, which runs on the Ethereum blockchain. Shiba Inu is now the second-largest holding among Ethereum whales.

Whales are the crypto equivalent of "smart" money. These are the investors that likely know how to invest in crypto better than the rest, so their moves are followed closely.

Now what

The rebound in the crypto sector today looks to be investors taking a break from what has been intense selling and perhaps using this as an opportunity to buy the dip.

While Shiba Inu certainly moves with the crypto market to some extent, I am not a believer in this token because it possesses no real-world use case or any kind of technical advantage over other cryptocurrencies. 

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

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The Shiba Inu (CRYPTO: SHIB) cryptocurrency had investors dreaming of instant riches last year. The digital coin rose tenfold in October, mostly thanks to a series of bullish tweets from Tesla CEO Elon Musk. At the peak of that hype cycle, the sky seemed to be the limit. 

But the blaze of publicity has been fading since November. Shiba Inu's price has fallen 88% below October's zenith. Some investors may be thinking about this token as a turnaround story in the making, hoping that coins bought at these ultra-low prices will rise from the ashes to even greater heights, phoenix-like.

Unfortunately, that's not likely to happen. Shiba Inu has had its moment in the spotlight and it's time to look for the next massive multibagger instead. This time, let's pick a name that can grow your investment many times over and looks capable of holding on to those gains in the long run. I would suggest a closer look at freelance services specialist Fiverr International (NYSE: FVRR).

A wide-open buying window

Like Shiba Inu, Fiverr has taken a drastic haircut recently. The stock had zoomed into the public eye at the start of the pandemic, where freelance gigs performed over the internet seemed like a great use for lockdown-based spare time. And a few extra dollars in your pocket didn't hurt during this period, which was plagued by a wave of layoffs and furloughs. 

When coronavirus vaccines became widely available, market makers suddenly decided that Fiverr's golden age was about to hit the wall. That's where the price drop started. In all fairness, Fiverr's stock traded at an unsustainable valuation of 47 times sales in January 2021. A correction was in order at the time, but now it has gone way too far down instead.

Great business results

You see, the gig economy is here to stay, and Fiverr is a leading force in that category.

Work-from-home policies turned out to be quite popular with information workers. This revelation is good for Fiverr in a couple of ways. First, freelancers can easily plug their services into the remote-enabled workflows of this new era. Second, the time you used to spend commuting to the office can now be spent on catching a couple of quick freelance gigs on the side instead.

So Fiverr's growth never hit that seemingly inevitable brick wall, and it's only a matter of time before the stock starts to reflect this reality again. Let's compare and contrast Fiverr's plunging stock chart with its booming top-line sales:

FVRR Revenue (TTM) data by YCharts

Furthermore, Fiverr isn't some unprofitable gadfly. The company generates cash profits on a regular basis and trades at roughly 40 times free cash flows nowadays. That untenable triple-digit price-to-sales ratio is back down to less than 6. These are highly reasonable valuation ratios for a high-octane growth stock like Fiverr. 

And don't forget that we're looking at a minnow swimming in a massive pond here. Fiverr's trailing sales add up to just $316 million right now, but the global market for freelance service arrangements is already estimated at $115 billion in these early days of the emerging gig economy.

Where do I sign up?

Fiverr's stock is much too cheap to ignore right now. In fact, I doubled down on my own real-money Fiverr stake last week. This is one of the most inviting investment opportunities on the market. That includes flash-in-the-pan cryptocurrencies like Shiba Inu. Fiverr's stock has suffered a price reduction similar to the dog-themed crypto ticker's, but only one of the two investment names is likely to spring back to life again. 

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

The post Thinking about buying Shiba Inu? Read this first appeared first on The Motley Fool Australia.

What happened

Despite a good start for the stock market today, cryptocurrencies struggled as investors digested the Federal Reserve's recently released minutes from its May meeting.

At 10:53 a.m. ET, the price of Bitcoin (CRYPTO: BTC) had fallen roughly 2.2% over 24 hours. Meanwhile, the price of Dogecoin (CRYPTO: DOGE) was trading 5.7% lower, and the price of Shiba Inu (CRYPTO: SHIB) was trading 5.5% down. 

So what

Yesterday, minutes were released from the Fed's May meeting, which revealed the Fed may be willing to raise its benchmark overnight lending rate, the federal funds rate, potentially more aggressively than the market initially thought. The market has been expecting the federal funds rate to end the year in a range of 2.5% to 2.75%. It's currently in a range of 0.75% to 1% after the 0.25% rate hike in March and then a half-point hike earlier this month.

"Most participants judged that 50 basis point (0.50%) increases in the target range would likely be appropriate at the next couple of meetings," the minutes stated, adding that "a restrictive stance of policy may well become appropriate depending on the evolving economic outlook and the risks to the outlook."

If the Fed raises rates higher than the market expects, that may not be so great for the likes of Bitcoin and other cryptocurrencies because higher interest rates make safer assets more appealing and riskier assets less appealing.

But there have been several recent voices from the Street saying that Bitcoin may be ready to turn the corner, which is likely good for other cryptocurrencies. JPMorgan Chase analyst Nikolaos Panigirtzoglou and his team have recently come out and said the fair value of Bitcoin is currently $38,000, which implies some good upside from Bitcoin's current price of roughly $29,280 as of this writing. Panigirtzoglou in a research note called Bitcoin a "preferred alternative asset."

"The past month's crypto market correction looks more like capitulation relative to last January/February and going forward we see upside for bitcoin and crypto markets more generally," he added in the note.

Furthermore, Yves Lamoureux, who heads his own macroeconomic research firm and who advised clients on Bitcoin's impending fall last November, now believes Bitcoin could reach $100,000 by the end of 2023.

"I'm interested in Bitcoin because it is the king and that's where institutional money will flow first. So always stick with the best. Everybody wants to be Bitcoin, but they're not...don't make it complicated, stick with Bitcoin," Lamoureux recently told MarketWatch.

The main trigger event Lamoureux is watching for is Bitcoin miners seeing their rewards for mining new tokens cut in half, which could trim the overall supply, an event that occurs every four years and is slated to happen sometime in early 2024. 

Now what

Dogecoin and Shiba Inu appear to be following Bitcoin like most of the crypto markets today. I do not know whether JPMorgan and Lamoureux's calls will be right or when Bitcoin will bottom. But I do think the world's largest cryptocurrency is here to stay and do consider it a long-term buy and hold.

I don't see any real reason to invest in Dogecoin and Shiba Inu, but given their current place in the crypto world, they will likely continue to move with the broader crypto market, at least in the near term. 

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

The post Why Bitcoin, Dogecoin, and Shiba Inu are falling today appeared first on The Motley Fool Australia.

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.

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Shiba Inu is known for two things: Its mascot, the Shiba Inu dog. And its jaw-dropping 2021 performance. The cryptocurrency surged 45,000,000% last year. It's pretty much impossible to predict that sort of enormous short-term gain. But there are elements that can help us pick potential long-term winners in this dynamic market.

When I say winner, I'm referring to cryptocurrency players that have what it takes to attract more and more users and investors. And that eventually should lead to an increase in market value. The following two players could dwarf Shiba Inu over the long term. They offer more real-world utility. Both of the following players are blockchains that can host decentralized applications (dApps). And, unlike Shiba Inu, they aren't limited by a massive circulating supply of tokens. Let's check them out.

1. Ethereum

Ethereum (CRYPTO: ETH) already is a leader in the cryptocurrency market. It's the second largest by market value after Bitcoin. But Ethereum has room to grow. And that could happen soon. Here's why. Ethereum right now is tackling its biggest problems: transaction speed and fees. The crypto player is in the middle of a major upgrade.

The idea of the upgrade is to carry out transactions more quickly -- and that will reduce congestion and costs users pay to complete operations on the network. Part of this involves a switch from the proof-of-work validation process to proof-of-stake. This puts validation power in the hands of those who have the biggest stake in Ethereum. And it eliminates the need to use tons of computer power to validate. This means an extra advantage is a greener platform.

Ethereum expects to switch over to proof-of-stake in the third or fourth quarter of this year. Then, it aims to introduce sharding next year. These chains relieve congestion on the main network. The result of the complete upgrade? Ethereum will go from today's average of about 15 transactions per second to more than 100,000.

As I mentioned above, coin supply won't hold Ethereum back from gains. Circulating coins total about 120 million. That's compared to 549 trillion for Shiba Inu. Ethereum -- unlike Shiba Inu -- has room to grow in value without reaching an impossibly high market capitalization.       

2. Cardano

One of Ethereum's co-founders went on to launch Cardano (CRYPTO: ADA). So, we can count on a lot of the same quality in this younger player. What makes Cardano special? First, it already uses proof-of-stake to validate transactions. So, it's already pretty fast. It can handle 250 transactions per second. And software engineers are working on a scaling solution that could greatly increase speed. 

Another positive is the way work on Cardano is unfolding. The blockchain only launches an update or something new after a peer review process. Of course, this slows down progress. But the big plus here is it avoids technical problems down the road. Once work on Cardano is complete, the system may be more reliable than other blockchains that have moved more quickly.

Right now, software engineers are working on the final two stages of Cardano development. The roadmap includes a total of five stages. The goal is to create a completely self-sustaining, decentralized system. Last fall, Cardano's smart contract functionality launched. Right now, more than 2,600 smart contract scripts in the Plutus language exist on the network, according to Adapools.org.

Like Ethereum, Cardano's growth isn't limited by token supply. Cardano's tokens in circulation total about 33.7 billion. So, Cardano could increase by five, for example, and still maintain a reasonable market value. All of this means investors in Cardano today have the opportunity to get in early -- and watch the blockchain grow. 

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

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The recent volatility in the stock market has sent the Nasdaq 100 technology index into bear market territory with a year-to-date loss of 24%, but that pales compared to the wild swings in cryptocurrency markets in 2022 so far.

Crypto-market leader Bitcoin (CRYPTO: BTC) is nursing a 37% loss since Jan. 1, and high-flying meme-token Shiba Inu (CRYPTO: SHIB) is down 62% in the same period. Shiba Inu was the star of 2021, delivering a full-year gain of 43,800,000% -- in other words, it made millionaires out of investors who put in as little as $2.29 on Jan. 1, 2021, and sold on Dec. 31. 

Overall, Shiba Inu has lost 85% since hitting its all-time high of $0.000088. It trades at just $0.000013, and there's no telling where the bottom could be. But the token might have one saving grace that could propel it back to its highs (and beyond). 

There's no shortage of difficulties

Shiba Inu faces plenty of challenges, both internal and external. Like many cryptocurrencies, the token has failed to garner the adoption it needs to support a higher price. At the moment, only 659 merchants accept Shiba Inu as payment for goods and services, and they're mostly small online businesses. It offers little incentive to consumers to own the token because they simply can't spend it conveniently, which leaves speculation as its primary use.

Wild price swings could be one reason businesses avoid Shiba Inu as a payment method. A currency that swings in price by millions of percentage points in a short period of time could quickly erode a merchant's profit from selling products, and it makes cash flow forecasting really difficult.

Additionally, a wave of regulation could be headed for the entire crypto industry, starting with requirements for exchanges to report their clients' trading activity to the Internal Revenue Service for tax purposes. This would lift the veil of anonymity and erode some of the decentralized features that initially attracted many investors to crypto markets. Investors who remain committed to cryptocurrencies will likely favor the leaders like Bitcoin in this scenario, with speculative bets like Shiba Inu discarded more willingly. 

Finally, Shiba Inu has a major supply problem. With 589 trillion tokens in circulation, it makes lofty price targets like $1 (or more) mostly a dream. But there is one catalyst that could change all of that.

Feel the burn

Tackling Shiba Inu's supply challenge has been a point of focus for the token's community. Collectively, at the current price of $0.000013, the value of all Shiba Inu tokens in supply stands at $7.1 billion. 

Theoretically, if the 589-trillion supply figure was cut in half, the price per token would have to double to maintain a market capitalization of $7.1 billion.

Therefore, finding a way to remove Shiba Inu tokens from supply could result in an organic increase in price, reversing some of the heavy losses from the last few months. One way developers propose to do this is through a Shiba Inu-themed metaverse called SHIB: The Metaverse. It will contain 100,595 virtual land plots in addition to serving as a virtual meeting place for the community, hosting games and non-fungible tokens (NFTs).   

Investors who want to buy virtual land in SHIB: The Metaverse will have to use Ethereum (CRYPTO: ETH), but there will be a unique role for Shiba Inu tokens to play. Landowners will have the ability to rename their plots by paying a fee using Shiba Inu, and upon doing so, those tokens will be burned (removed from the supply) forever. 

It might work, but not in the way you expect

Reducing the supply of Shiba Inu will theoretically boost its price. In fact, it could do so by a significant amount depending on how many tokens are burned. If supply is reduced by 90% from 589 trillion tokens to 58.9 trillion tokens, for example, Shiba Inu's price could soar 10-fold from $0.000013 to $0.00013, surpassing its previous all-time high.

But there's a catch. For this to work, basically every investor in Shiba Inu would need to shrink their holdings by 90%, although the value of their tokens would effectively remain exactly the same. Their tokens might be worth 10 times more, but they would only own one-10th as many tokens. 

Reducing the supply of Shiba Inu could be described as financial engineering. It doesn't actually make the token worth any more than it already is. To truly boost its value, it would have to actually offer some utility as a payment mechanism or find a way to attract more investors. 

But for those looking for a cosmetic lift in Shiba Inu's price, burning tokens is certainly a viable option. 

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

The post Shiba Inu is down 85%, but here's how it could recover appeared first on The Motley Fool Australia.

What happened

Cryptocurrencies continued to struggle today as the market continues to navigate a worrisome macro outlook that is leading to a sell-off of riskier assets.

Over the last 24 hours, the price of the world's largest cryptocurrency, Bitcoin (CRYPTO: BTC), was trading roughly flat at 10:56 a.m. ET today. However, Bitcoin briefly dropped below $30,000 today for the second time this week and is down more than 12% over the last five days.

The price of Dogecoin (CRYPTO: DOGE) had fallen roughly 16% over the last day at the same time, and the price of Shiba Inu (CRYPTO: SHIB) had fallen roughly 17.5%.

So what

Cryptocurrencies haven't fared much better than tech stocks in recent months, as the Federal Reserve first tightened and then raised its benchmark overnight lending rate, the federal funds rate. It has raised that rate roughly 0.75% over its last two meetings, including with a half-point hike at its meeting earlier this month. When the Fed hikes rates, it makes safer assets like U.S. Treasury bills, which are guaranteed by the U.S. government, yield more. That makes investors demand higher returns from other riskier assets, which can put pressure on them.

"This further supports the case that bitcoin investors were seeking to de-risk, sell or add collateral to margin in response to market volatility," analysts from the blockchain company Glassnode wrote in a report earlier this week.

Additionally, inflation has remained high. New data from the Bureau of Labor Statistics showed that the Consumer Price Index, which tracks the prices of common everyday goods and services, was up 8.3% year over year in April. That's down slightly from the increase in the CPI in March but more than the 8.1% increase that experts and analysts had been predicting. 

"We're starting to see energy [costs] pull back a little bit, but it's not enough," said Kathy Jones, the chief fixed-income strategist at Charles Schwab, according to CNBC. "The markets were hoping for a better number and it's not good enough to rule out more Fed tightening."

Many have long seen Bitcoin as a good hedge against inflation due to its finite supply of 21 million tokens. But so far there's been no real proof of that, as the price of Bitcoin is now down more than 50% over the last six months.

Now what

I don't see much news on the meme tokens Dogecoin and Shiba Inu, but I think they are struggling along with the broader altcoin market.

While they definitely trade with some correlation to Bitcoin, altcoins like this are arguably even riskier because they are not being driven by any kind of fundamentals in the first place, but really by their ability to build a community and investor excitement around themselves.

Additionally, there is likely no chance that either Dogecoin or Shiba Inu could ever hedge inflation due to their huge supplies. Dogecoin has no supply limit, while Shiba Inu's is 1 quadrillion tokens, although there are currently 549 trillion tokens still in circulation.

Ultimately, I am pretty bearish on Dogecoin and Shiba Inu but still believe in Bitcoin as a long-term buy and hold. Every day, more of the traditional financial system seems to adopt Bitcoin and use blockchain technology.

I also believe there is the potential for cryptocurrencies to gain more adoption among consumers for daily transactions and payment purposes, which would also likely be good for crypto prices. 

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

The post Why Dogecoin and Shiba Inu are tumbling today appeared first on The Motley Fool Australia.

What happened

So what

Now what

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

The post Why Shiba Inu was falling today appeared first on The Motley Fool Australia.

What happened?

The cryptocurrency market is seeing another day of sell-offs today. The prices of Shiba Inu (CRYPTO: SHIB), Ethereum (CRYPTO: ETH), and Dogecoin (CRYPTO: DOGE) tokens were losing ground in conjunction with the sell-off momentum. They were down roughly 5%, 2.1%, and 1.6%, respectively, over the previous 24 hours of trading as of 10:15am Sunday.

Nearly every top-100 cryptocurrency token has seen sell-offs over the last day of trading. In fact, excluding stablecoins, only TRON's token was in the green over the period.

So what?

Investors have been taking money off the table lately and moving out of investments that have high-risk profiles, and it's led to major pullbacks that have shaped the overall momentum for cryptocurrencies and stocks. To put the trend in perspective, the tech-heavy Nasdaq Composite index just had its worst month since 2008, and rising bearish sentiment is also shaping trading in the crypto space. 

It's also possible that recent comments from Berkshire Hathaway's CEO Warren Buffett and vice chairman Charlie Munger are factoring into the sell-off. Berkshire held its shareholder meeting in Omaha yesterday, and the executives made some scathing comments about Bitcoin (CRYPTO: BTC) and the cryptocurrency market as a whole. Speaking on the current crypto market leader, Buffett had this to say: "If you told me you owned all the Bitcoin in the world and you offered it to me for $25, I wouldn't take it. What would I do with it?"

While bearish comments from the two Berkshire luminaries are nothing new, it's possible that the latest round of critiques from the pair have been particularly resonant amid the current market conditions. Worrying levels of inflation have the Federal Reserve on track to raise interest rates well above current levels before the year is out, and rising rates have typically meant a challenging backdrop for speculative investments. 

Many investors and analysts have raised the concern that rising interest rates could push the US economy into recession because loans becoming more expensive will make businesses less likely to pursue new growth initiatives. The same general principle can be applied to buying stocks and cryptocurrencies. When taking on debt is cheap, some of that capital flows into relatively high-risk assets and stocks. When rates are higher, those kinds of investments typically become less attractive.

Now what?

In some respects, the current macroeconomic situation is without recent historical precedent to draw comparisons to. The cryptocurrency market also remains relatively young in the scheme of things, and that makes it difficult to forecast how it will perform if economic conditions worsen significantly. 

The Department of Commerce recently published a report showing that the US economy had contracted 1.4% year over year in the first quarter. Given that the Fed only implemented a 25 basis point rate increase in the middle of March, the fact that gross domestic product unexpectedly slipped in the quarter while inflation continued to run hot is concerning, and it could point to a tough backdrop for cryptocurrencies and other high-risk investments going forward. 

While Ethereum provides a blockchain network that applications and services can be built on, cryptocurrencies like Shiba Inu and Dogecoin primarily function as mediums of exchange and as speculative assets. That suggests that Ethereum's Ether token might hold up relatively well if turbulence continues to roil the broader crypto market, but again, there's not a whole lot in the way of historical precedent to base projections on. 

Bitcoin kicked off the cryptocurrency trend with its release back in 2009, but even the current crypto market leader didn't start to see significant adoption until years later. Outside of the pandemic market-driven crash that occurred in March 2020, in which leading cryptocurrencies performed worse than stocks before roaring back to big gains, there's not much to look at when it comes to determining how digital tokens might fare amid intense bearish conditions. As such, it's probably best to move forward with the understanding that most cryptocurrencies are high-risk, high-reward investments.

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

The post Why Shiba Inu, Ethereum, and Dogecoin are sinking today appeared first on The Motley Fool Australia.

What happened 

Cryptocurrency investors woke up to a down market on Monday, which just happens to also be tax day in the U.S. In a volatile market like crypto, it seems like every day is either up or down big and today the sellers are winning. 

Bitcoin (CRYPTO: BTC) had fallen as much as 4.1% as of noon ET, while Ethereum (CRYPTO: ETH) dropped up to 5.8%, Dogecoin (CRYPTO: DOGE) fell 6.9%, and Shiba Inu (CRYPTO: SHIB) fell up to 8%. The selling was widespread so there's no reason to be especially worried about any particular cryptocurrency. 

So what 

It's hard to ignore that today is tax day in the U.S. Crypto traders may be selling in order to pay taxes due, which can be surprising if this is your first time paying taxes on large trading gains. 

Over the weekend there was also news of a $182 million hack of the Beanstalk protocol, a stablecoin credit protocol built on Ethereum. This continues a series of hacks of cryptocurrencies across the industry, which undermines investor confidence in the ecosystem. This is an industry wide problem and it doesn't seem that there's a great solution right now.

The stock market overall is down today as well and that has generally meant that more volatile cryptocurrencies will magnify those losses. 

Now what 

Volatility is the name of the game in cryptocurrency and that doesn't seem to be changing anytime soon. Search the internet and you can find analysts and investors who are afraid of inflation, or regulation, or hacking, while others are bullish for reasons that range from innovation to crypto being an inflation hedge. 

For today, I don't see anything to be worried about in any of these cryptocurrencies. Given the trends of the industry, I think Ethereum is the best bet given the real utility that can be built in the ecosystem and the projects being built there already. Bitcoin, Dogecoin, and Shiba Inu simply can't claim the same kind of digital ecosystem. 

If today's selling is indeed due to tax season or the down stock market this could be a good buying opportunity for investors. Nothing has fundamentally changed about crypto today and we're seeing the industry build more and more applications every day. We are also likely to get some regulatory updates in the U.S. and Europe this year, which could be a boost to the industry's development long-term. 

When I see moves like this today I tend to brush them off because nothing about cryptocurrencies is fundamentally different than a day ago. It's just that current portfolios are a little lower for the time being. 

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

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