Falling price of crypto Shiba Inu sounds alarm bells
“The supply limitation, the coin’s price to extremely low decimal places, the timely Twitter posts, and the donation of Shiba Inu coins to Ethereum co-founder Vitalik Buterin are some of what captivates speculators.” Bloomberg Intelligence analyst Mike McGlone wrote in an Oct. 29 note. “Shiba Inu presents a unique blend of exploitation, good marketing, ESG, economics of supply over demand and gaming on an unprecedented global scale 24/7, and faces a reversion worthy of his parabolic ascent. “
After soaring prices for most of October, Shiba Inu has fallen in recent days. The coin, each of which is trading for tiny fractions of a dime, is currently down about 30% in the past 24 hours and has fallen about 48% from its October 27 peak at 0. US $ 000,004,546 Thursday (US time), according to CoinMarketCap.com.
“For crypto with no underlying economy – whose value is determined only by speculation – concentrated ownership suggests a rigged game.”
Crypto investor Aaron Brown
Shiba Inu is not the first room to raise concerns about the high concentration of ownership. Initially, Bitcoin and Ethereum were heavily influenced by whales whose exchanges could influence market prices. The concentration of their ownership has since declined, as more institutions and retail investors have entered crypto. That said, even today, around 2,000 addresses own over 40% of all Bitcoin, per BitInfoCharts.
There are many pockets of the crypto market where coin ownership is still very concentrated. Most of the smaller of the more than 13,500 cryptocurrencies are majority owned by a handful of wallets. In decentralized finance apps, which create their own tokens to allow people to trade, lend, and borrow from each other, a small percentage of users control everything. Between 20 and 50 crypto-trading companies “push most of the crypto volume,” said Antonio Juliano, founder of DeFi exchange dYdX.
“I don’t think it’s that different from the way things work in traditional finance,” he said. “Big Wall Street funds push most of the volume.”
Yet a lack of regulation and official market oversight leaves coins like Shiba Inu vulnerable to suspicion even as its spike in prices brings it to a larger and larger audience. Although it is available for trading on the Coinbase exchange, others such as Kraken and Robinhood have so far resisted – despite voice lobbying from their clients.
“Legitimate crypto has a strong underlying economic record, its value doesn’t depend very much on who owns how many,” adds Brown. “But for crypto with no underlying economy – whose value is determined only by speculation – concentrated ownership suggests a rigged game.”