1 Meme Coin to Avoid Like the Plague

At the height of the cryptocurrency investment craze a few years ago, Shiba Inu's (CRYPTO: SHIB) value skyrocketed, and many investors were assuming it could reach $1 or higher. Those hopes have been dashed spectacularly over the past few years, and the value of one Shiba Inu coin has fallen by 90% since its peak in 2021.

However, some cryptocurrency investors believe that Shiba Inu could bounce back from its losses and reclaim some of its former glory. Here's why that's unlikely and why investors would do better to avoid Shiba Inu altogether.

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Shiba Inu has no real-world utility

The biggest problem with meme coins is that they often lack, or have minimal, real-world utility. Developers have tried to spark interest in Shiba Inu by launching a metaverse with the coin and creating ShibaSwap, a decentralized exchange. But those are Band-Aids over Shiba Inu's fatal flaw -- that it doesn't have practical usefulness in the real world.

Compare that with Ethereum (CRYPTO: ETH), where many decentralized apps (dApps) are built and where major financial firms use its blockchain for some global payment transactions. Ethereum has become the de facto blockchain because it has a large developer network that keeps it up to date, and it is more secure than competing technologies.

Shiba Inu's price rises and falls simply on the sentiment of crypto investors, which is a bad investment strategy for serious investors.

It hasn't benefited from a crypto-friendly government

Another red flag for Shiba Inu is the fact that even amid a generally pro-crypto government in the U.S. right now, the meme coin has continued to fall.

To be clear, I don't think a lot of the pro-cryptocurrency moves the Trump administration has made are good, including Trump launching his own meme coin, which raises lots of ethical questions. But the fact that Shiba Inu is down 68% over the past year, despite a rollback of some crypto regulations, could be an indicator that Shiba Inu's price can't even make gains during seemingly beneficial moves in the crypto industry.

While other coins have fallen recently as well, I'd argue that some, like Bitcoin and Ethereum, have fallen much less and have far more practical use cases than Shiba Inu. Meaning, their pullback could be more temporary than an indication of bigger issues.

Better to leave this dog alone

There are many better cryptocurrencies out there to invest in, without having to place a wild bet on Shiba Inu. Investors hoping for the coin to surge higher and usher in a sustainable meme coin rally are likely to get bit in the long run.

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