Almost every time one opens a crypto publication these days, there is likely to be a picture of a dog somewhere amongst the headlines. Now we know that posting images of furry friends both canine and feline is very popular on social media, but they’re apparently just as popular in the crypto sphere.
I’m talking about Dogecoin and Shiba Inu, of course. And as Lawrence Lewitinn writes at Coindesk, “Bitcoin may be the alpha dog of crypto, but for many small retail investors these days, dogecoin and shiba inu are the pick of the litter.”
Craze almost collapses Indian exchange
The buying craze for these two coins reached such a height in India, that Binance subsidiary, WazirX, India’s largest cryptocurrency exchange, suffered outages as traders jumped into the fray, buying shiba inu and stressing out the platform’s servers last Wednesday. Its CEO, Nischal Shetty tweeted that over half a billion dollars’ worth of trades were done on WazirX that day, the highest of any crypto exchange in India.
“It basically brought down our exchange,” Siddharth Menon, one of WazirX’s co-founders and its chief operating officer. ““The kind of active numbers and the active users that we saw in the last 48 hours has actually shocked us. We were not ready for it. We were all ready for the bitcoin move, but we were never ready for shiba inu.”
Menon says he suspects some kind of unit bias is at play here. What he means by this is that novice traders may jump in and buy a lot of one kind of cryptocurrency because the price of one unit of it is relatively small compared with, say, bitcoin even though one can buy the same dollar amount in bitcoin as the low-priced coin. And as Lewitinn comments, “For investors who are dipping their toes in the water with a relatively small amount of money, a low-priced coin can make one feel a little richer. For example, as of this writing, $620 buys 0.01 BTC. On the other hand, it buys about 10 million SHIB.”
Led by retail buyers
Although some who might be called ‘the smart money’ are buying dogecoin and shiba inu, they are still more interested in buying Bitcoin and Ethereum. For example, on Coinbase, the average Bitcoin trade size is hovering at around $2,000, while ETH trades average $1,600. On the other hand, the exchange sees average trades for dogecoin and shiba inu at around roughly $800.
Clara Medalie, strategic initiatives and research lead at digital asset data provider Kaiko, says, “This suggests price action is mostly retail-driven,” adding, “While average trade size isn’t a perfect gauge for institutional investment – most large traders break apart their orders into smaller sizes – we can still observe clear trends that correspond with waves of interest.”
But these meme coins also serve another purpose: they allow retail traders to test out the experience of buying, holding and selling a small amount of cryptocurrency on new platforms by placing different types of orders and seeing how they get filled – or not. They do this even though buying Bitcoin is much easier. No doubt they are encouraged by the recent story that has been widely circulated in the mainstream media about the mystery trader who bought $3,400 of SHIB last August, the month the meme coin launched, and is now a billionaire.
As with Dogecoin, tweets from Elon Musk have helped Shiba Inu’s spectacular rise, and its listing on Coinbase in June this year has also helped it.
Before anyone rushes to put all their life savings into SHIB, we have to ask ourselves if it will continue to rise in value at the same rate as it has over the last twelve months. Some analysts say it’s highly unlikely it will ever reach the $1 mark, as it can’t compete with rival Dogecoin. But if you’re a dog lover, it’s probably worth buying some, if only for the fun.