Dogecoin, Shiba Inu Underperform Broader Crypto Market Despite Fundamental Growth

Adoption and usage of the two tokens failed to move prices by much even as the crypto market added 5%.

AccessTimeIconMay 5, 2022 at 11:40 a.m. UTC
Updated May 5, 2022 at 3:40 p.m. UTC

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

The tokens of dogecoin (DOGE) and shiba inu (SHIB) rose by an average of 3.5% in the past 24 hours even as the broader market added over 5%, data from CoinGecko shows.

The relative underperformance came even as both ecosystems saw fundamental growth in their underlying communities. DOGE was used to fund the purchase of a controlling stake in BIG3 league basketball team Aliens and shiba inu developers started allowing community members to use SHIB for minting virtual land on shiba inu’s recently launched metaverse.

Bill Lee, a tech investor and founder of dogecoin wallet MyDoge, purchased non-fungible tokens (NFTs) offered by the Aliens exclusively for DOGE, giving him a controlling stake in the team. MyDoge branding will feature on Aliens team jerseys, events and BIG3 broadcasts as part of the purchase.

For Shiba Inu, SHIB joins ether (ETH), previously the only payment method available. Last month, Shiba Inu developers also launched a burn portal, which allows users to permanently destroy their tokens in return for yields.

Still, the changes failed to move prices of the two tokens even as total market cap for cryptocurrencies added 5%. At the time of writing, SHIB was changing hands at $0.00002148, a 3.55% rise over the past 24 hours, and DOGE rose 3.28% to $0.1344 – displaying sluggish growth for tokens that are known to be extremely volatile.

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DOGE failed to beat the market on Wednesday. (TradingView)

Musk’s tweets

Some analysts said price changes in the tokens are partly attributable to tweets by Tesla (TSLA) CEO Elon Musk, a factor that investors have increasingly become wary about.

The change in SHIB is "a far cry from the moves it makes when responding to Elon Musk’s tweets,” said Egor Volotkovich, director of EVODeFi, a cross-chain product. “This trend has shown that both shiba inu, dogecoin and other meme coins rely heavily on Musk’s unpredictable publicity to return good growth to their investors.”

Other market observers echoed the sentiment: “There is a very high dependence of both cryptocurrencies on Elon Musk’s tweets over time,” Fuad Fatullaev, CEO of NFT platform WeWay, said in a Telegram chat.

Fatullaev, however, said Shiba’s metaverse could see growth in the coming days. “We can expect the metaverse project to serve as a means for Shiba Inu to begin charting its own organic growth. And with the new utility it is bringing to the table, it may be compared to Yuga Lab’s Otherside metaverse.”

Musk has previously lent support to dogecoin adoption and development, and his tweets have regularly, if temporarily, caused a surge in DOGE prices. Tesla already accepts DOGE as a payment option in its merchandise store, and Musk teased DOGE payments on Twitter (TWTR) last month as well, days before agreeing to purchase the social media giant.

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Shiba Inu has remained in a steady downtrend since a few weeks. (TradingView)

ApeCoin effect?

Meanwhile, some traders said ApeCoin’s (APE) recent rise could allow it to be seen as one of the top risk-on assets alongside DOGE and SHIB.

"There has been some talk in crypto networks of APE filling in as the proxy risk-on asset replacing DOGE and SHIB,” said Kurt Grumelart, a trader at Sydney-based crypto fund Zerocap. “While this has had little time to prove itself, APE could fulfill the role and becomes the chosen meme token in the crypto community, particularly as Yuga continues to increase its cultural influence."

APE, and its futures, are among the most traded cryptocurrencies in the past week amid the highly-anticipated launch of Otherside, a metaverse for the Bored Ape Yacht Club (BAYC) ecosystem. APE is the governance token of BAYC and can be used to purchase virtual land in the Otherside metaverse.

The market activity of meme coins, however, could showcase how their investors generally approach such assets.

"Meme coin investors [very generally speaking] are primarily focused on catching the next 1,000x, drawing capital away from established tokens such as these,” Grumelart said, explaining the underperformance of DOGE and SHIB.

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Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

CoinDesk - Unknown

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

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