Is Shiba Inu a Bargain Buy or Destined for More Decline?

Key Points

• Shiba Inu's value has crashed this year, even as Bitcoin has been hitting new heights.

• Stablecoins have been gaining more attention this year and may have been stealing the spotlight.

• 10 stocks we like better than Shiba Inu ›

It's been a great year for the crypto markets as a whole, but one coin that hasn't been benefiting from the excitement is Shiba Inu (CRYPTO: SHIB). It trades at $0.000014 as of July 16, down about 35% since the start of the year.

Although there are hopes of a Shiba Inu spot exchange-traded fund (ETF) in the future, which could result in increased investment in the crypto, the meme coin remains down in the dumps. Could this be a great time to buy this struggling coin, or should you expect more decline in the weeks and months ahead?

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Image source: Getty Images.

A concerning trend for Shiba?

What's troubling about Shiba Inu's decline is that it comes amid strong crypto market conditions. Bitcoin has risen by about 26% in value this year, hitting new all-time highs along the way.

Investors don't appear to be shying away from crypto at all. And it's becoming more mainstream these days with the government being more crypto friendly than under previous administrations.

And the Shibarium, which is a Layer-2 blockchain network that was launched in 2023 to speed up transactions and cut costs in the Shiba Inu ecosystem, hit a milestone of 1 billion transactions earlier this year, illustrating high volumes and adoption levels. But despite these seemingly encouraging developments, Shiba Inu's value has continued to fall this year. If the crypto market encounters less favorable market conditions, it may perform even worse.

Are meme coins no longer a hit with investors?

It's not only Shiba Inu that has been performing poorly this year. Rival Dogecoin has also fallen on hard times and it too is down about 35% this year. With the top two meme coins plunging this year, it raises the question of whether investors are simply ditching risky meme coins and moving toward safer options instead.

Plus, with Circle Internet Group going public recently and highlighting yet another way to invest in crypto -- via stablecoins -- meme coins may not be getting the attention they once did. Stablecoins that are pegged to the U.S. dollar can make for less volatile investments and appeal to a wider range of investors, including those who may not be comfortable with taking high risks but who still want exposure to crypto.

Should you buy Shiba Inu today?

Buying meme coins comes with significant risks because in the end, these are speculative purchases, and it can be nearly impossible to predict where they will go. It ultimately comes down to how popular one coin is versus another. And with more coins to choose from and stablecoins becoming more mainstream and rising in popularity, there may not be as much appetite for meme coins these days.

This could be part of a longer-term trend away from meme coins as the crypto market matures and investors seek safer options. And that's why I would hold off on buying Shiba Inu, because there simply isn't much of a reason to expect a turnaround and for it to suddenly rally.

Unfortunately, its days of being a top cryptocurrency may be a thing of the past. With a market cap of $8.3 billion, it is now just the 18th most valuable cryptocurrency in the world -- a far cry from the days when it would be around the top 10.

Although it may look cheaper than it was at the start of the year, there's no reason the meme coin can't continue to go even lower. If you want a position in crypto, you're likely better off investing in Bitcoin or crypto stocks. Shiba Inu is simply far too risky to buy right now.

Should you invest $1,000 in Shiba Inu right now?

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.