What Drove Shiba Inu's Double-Digit Move Higher This Past Week?

Shiba Inu (CRYPTO: SHIB) is among the most impactful movers in this week's cryptocurrency market. The world's second-largest meme coin surged 10.6% over the past seven days (as of 12:45 p.m. ET Sunday), surging off the multi-year lows this token made almost exactly one week ago.

Accordingly, many market participants may view this week's move as a simple recovery rally. That's certainly part of the story, and shouldn't be dismissed.

That said, there are a few key updates worth noting that could reshape the narrative around Shiba Inu as a token that provides more utility than simply its vibrant community (still very important to those invested), which many point to as the key investment rationale for this meme coin.

Key network upgrades spur demand in Shiba Inu

Image source: Getty Images.

Early March can perhaps best be described as a period of intense uncertainty for investors in all asset classes. Indeed, the ongoing (and escalating) geopolitical conflicts we're seeing proliferate worldwide have wreaked havoc on long-duration assets, particularly those viewed as the most speculative. As such, it should come as no surprise to investors that Shiba Inu is among the most popular cryptocurrencies to have seen a significant decline since the start of this year.

That said, the crypto market has rebounded nicely over the past week, as investors appear to be looking for a bottom. That sentiment shift, alongside some positive news around network upgrades for the Shiba Inu blockchain, appears to be driving most of this week's impressive move.

In early March, the Shiba Inu developer team announced key changes to Shibarium, a Shiba Inu layer-2 network built on top of Ethereum (CRYPTO: ETH), including block indexing on its explorer (about half complete). When these upgrades are finished, it's expected that endpoint stability will improve and centralization risks will be reduced. That should have a major impact on usage (at least in the positive case, among those bullish on Shiba Inu long-term), driving outsized leveraged bets in the perpetual futures market.

I'm still on the fence with respect to whether these amplified bets placed on Shiba Inu will ultimately result in positive or negative moves. What I can say is that the additional leverage seen in large positions within the Shiba Inu community could invite significant volatility moving forward. As such, I think whether investors consider owning Shiba Inu depends on their investment time horizon and risk profile.

Chris MacDonald has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum. The Motley Fool has a disclosure policy.