Dogecoin and Shiba Inu have been two of the most talked about cryptocurrencies in 2021 and 2022. Both started out primarily as meme coins but have since gained legitimacy and seen substantial price increases. In this article, we’ll examine the factors that led to the meteoric rise of Dogecoin and Shiba Inu, analyze whether they can continue this growth trajectory, and provide an outlook on their future potential.
The Rise of Dogecoin
Dogecoin was created in 2013 as a lighthearted cryptocurrency based on the popular Doge meme. For years it remained a niche crypto with low value. The tide started turning in 2020 when influencers such as Elon Musk began promoting Dogecoin on social media. This brought it to the attention of a wider audience.
In early 2021, the Reddit group r/WallStreetBets decided to rally behind Dogecoin, causing a surge in its price. Dogecoin continued to gain momentum thanks to Musk’s enthusiastic support, including his appearance on Saturday Night Live in May 2021. Its price skyrocketed over 12,000% at its peak that year.
Key Factors in Dogecoin’s Growth
- Celebrity endorsements — Musk has been the most vocal supporter, but other celebrities have also promoted Dogecoin. This draws public interest.
- Online community — The Reddit and Twitter communities surrounding Dogecoin are passionate supporters who create hype and buzz.
- Media attention — As media outlets report on Dogecoin’s meteoric rise, it validates it and fuels further interest.
- Accessibility — Dogecoin is seen as the «people’s crypto.» Its low price makes it attractive and easy to purchase for the average person.
- Inflationary supply — Unlike Bitcoin, Dogecoin has an unlimited supply that grows each year. This helps maintain low prices.
The Rise of Shiba Inu
Shiba Inu coin launched in August 2020 but remained obscure until 2021. It gained its first boost when Dogecoin’s price started skyrocketing. Shiba Inu markets itself as an alternative to Dogecoin, and is nicknamed the «Dogecoin killer.»
In May 2021, Ethereum founder Vitalik Buterin made headlines by donating $1 billion worth of Shiba Inu coins to charity. This erased half the Shiba Inu supply and caused its price to jump.
Like Dogecoin, Shiba Inu also benefitted from community buzz on Reddit and Twitter. Its price rose over 1,000,000% in 2021.
Key Factors in Shiba Inu’s Growth
- Dogecoin’s success — Shiba Inu gained momentum by marketing itself as the next Dogecoin.
- Vitalik Buterin’s donation — His massive coin burn made headlines and helped legitimize Shiba Inu.
- Elon Musk teases — Musk posting photos of his dog Floki (the same breed as doge) hints he may support Shiba Inu.
- Decentralized exchange — ShibaSwap gave Shiba Inu an ecosystem and use case.
- FOMO — Fear of missing out has driven many to purchase Shiba Inu as prices rise.
- Community — The «SHIBArmy» aggressively promotes Shiba Inu on social media.
Can the Growth Continue?
Dogecoin and Shiba Inu have exceeded all expectations so far. But can these meme cryptos sustain this growth moving forward? There are reasons to be cautious.
- Limited utility — Neither coin has much real-world utility right now beyond speculative trading and online tipping. This may limit long-term demand.
- Lack of institutional support — Major investors and businesses are unlikely to build on top of meme cryptocurrencies.
- Regulatory crackdown — Watchdogs may eventually target Dogecoin and Shiba Inu as they aim to protect inexperienced retail investors.
- Further celebrity endorsements — If celebrities continue hyping these cryptos, prices could keep rising.
- Loyal online communities — The grassroots buzz keeps building as more people join the Doge and Shiba movements.
- Adoption for payments — Some businesses already accept Dogecoin and Shiba Inu, which may eventually lead to mainstream usage.
- Expanded ecosystems — If developers build out the utility of Doge and Shiba with NFTs, games, DeFi, etc., demand would increase.
Dogecoin and Shiba Inu face challenges transitioning from hype-driven meme coins to cryptocurrencies with true staying power. However, they have already wildly exceeded expectations. With their passionate communities and celebrity boosters, further meteoric growth can’t be ruled out. But investors should beware of volatility and weigh risks versus rewards. Doge and Shiba present plenty of upside potential, but also the possibility of crashing back down to earth. Proceed with caution.