Jump in Shiba Inu Breed-Themed Tokens Is Unsustainable, Crypto Traders Warn

Meme coins have outperformed the broader crypto markets in recent days, but some say profit-taking could reverse the rally.

AccessTimeIconApr 6, 2023 at 6:47 a.m. UTC
Updated Apr 6, 2023 at 6:19 p.m. UTC
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Tokens fashioned after the Shiba Inu dog breed may see imminent selling ahead after days of outperforming the broader crypto market.

On Monday, Twitter, a social-media company owned by billionaire and crypto proponent Elon Musk, replaced its popular blue bird logo with that of Dogecoin’s Shiba Inu mascot. Dogecoin (DOGE) prices surged almost immediately – with its futures markets setting a record – as some bet on the increased use of dogecoin on Twitter's platform.

That rise caused several other Shiba Inu-themed meme coins to jump multifold, with the sector rising 14% on average. Tokens with larger market caps such as shiba inu (SHIB) rose up to 10%, while smaller-cap coins such as floki (FLOKI), kishu inu (KISHU) and baby dogecoin (BABYDOGE) surged as much as 25%.

Meme coins on newer blockchains had their moment, as well. Some dog-themed tokens, such as zkDoge and zkShib on the zkSync blockchain, which went live in March, registered gains of as much as 100%.

Such surges in price are unlikely to hold long term, however, as some traders warn that such moves don't indicate a broader trend.

"We do not believe that it is indicative of a long-term bull run. Quite the opposite,” Guilhem Chaumont, CEO of crypto trading firm Flowdesk, said in a Telegram message. “There is a regular pattern of crypto market uptrends with first, bitcoin going through a bull run, then major altcoins pumping, and finally, tokens with small market caps.

“Since bitcoin has been experiencing a relatively stable upward trend, meme coins’ rise would indicate the third phase, the end of the cycle. But there is no need to over-interpret such momentary price changes,” Chaumont said.

It is a sentiment shared by Bonnie Cheung, head of strategy at crypto developer Sending Labs. “The sentiment for meme coins is not a new one, and this means there is a high potential that the growth will fade off as usual in a few days,” Cheung said.

There could still be long-term growth for these tokens if fundamental features strengthen in the coming months.

“Shiba Inu, for instance, is gaining additional traction through the launch of Shibarium, its layer-2 protocol built on the Ethereum blockchain. Dogecoin’s recognition by Twitter and the payment world is also growing, and these trends can help record more sustained growth over the long term,” Cheung noted.

A testnet for Shiba Inu’s upcoming Shibarium platform has seen brisk adoption. Elsewhere, projects like Floki are actively developing games and decentralized-finance tools to cut free from the “meme coin” tag – at least as far as developer efforts go.

Meanwhile, some opine that Twitter’s move could pave the way for mainstream crypto adoption.

“Musk’s supportive tweets and the recent decision to add the Dogecoin logo to Twitter help keep both DOGE and SHIB in the public conversation,” Kadan Stadelmann, the chief technology officer of blockchain network Komodo, said in an email to CoinDesk.

“Regardless of whether or not one supports meme coins, it's impossible to deny that Musk is driving mainstream adoption of crypto and creating media attention that wouldn't otherwise exist. This is certainly a net positive for the crypto space as a whole,” Stadelmann added.

Edited by Parikshit Mishra.


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Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.

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