Much has been made of the S&P 500‘s historic bounce from the pandemic bottom set in March 2020. The slightly more than 100% gain in the index represents its strongest rally from a bear-market bottom on record.
However, this triple-digit gain wouldn’t even raise an eyebrow for those folks who’ve been holding meme coin Shiba Inu (CRYPTO:SHIB) since its debut on Aug. 1, 2020. In a little over 15 months, SHIB tokens have gained close to 10,000,000%. Essentially, a $10 investment on Day 1 would be worth about $1 million today.
AMC Entertainment lifts the curtain of obscurity for Shiba Inu
There are a lot of reasons Shiba Inu has been able to deliver life-altering gains in a relatively short time frame. In no particular order:
- An increasing number of cryptocurrency exchanges are listing SHIB for trade.
- The fear of missing out (FOMO) has taken hold, especially after seeing Bitcoin (CRYPTO:BTC) climb 8,000,000,000% in 11 years.
- The launch of decentralized exchange ShibaSwap in July has increased liquidity and promoted staking, which should encourage “hodlers” to hang onto their SHIB for longer periods of time.
- Elon Musk has helped push Shiba Inu higher with tweets themed around the Japanese Shiba Inu breed or his recently adopted Shiba Inu dog, which he named Floki.
Back on Oct. 29, AMC CEO Adam Aron posted a poll on Twitter which asked users whether his company should accept SHIB as a form of online payment. Nearly 88% of the 153,100 votes cast demonstrated some degree of support for enabling SHIB tokens for payment. Aron followed this up on AMC’s third-quarter conference call by noting the company was exploring ways to accept Shiba Inu coin. AMC now anticipates accepting Shiba Inu for payment within 60 to 120 days, per Aron.
When launched, Shiba Inu will join Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Dogecoin (CRYPTO:DOGE), SHIB’s key rival, as accepted forms of digital currency for AMC.
The next major merchant to accept Shiba Inu coin could be a doozy
AMC is a large-cap company with a global brand. But if rumors about another company come to fruition, Shiba Inu has a chance to land nothing short of a whale as its next merchant.
At the beginning of November, the rumor mill began wildly spinning when it was reported and confirmed that the name “SHIBA” was found in the payment processing code for Tesla Motors‘ (NASDAQ:TSLA) website. It was located directly beneath Bitcoin in the code.
For what it’s worth, this could mean a lot of things. For example, Tesla CEO Elon Musk owns Dogecoin in his crypto portfolio. Dogecoin’s two developers were inspired by a Shiba Inu meme. Musk has also previously tweeted that he’s working with Dogecoin’s current developers to improve the network. Thus, “SHIBA” could be a reference to Dogecoin and not Shiba Inu. In fact, Shiba Inu is known as the “Dogecoin killer,” with the two sides seemingly at ends.
Conversely, it could be as simple as Shiba Inu being programmed in for future acceptance.
At this point, neither Tesla Motors nor Elon Musk has confirmed what the “SHIBA” reference in the payment source code alludes to.
However, Musk does have a penchant for embracing cryptocurrencies. As some folks might recall, Tesla purchased $1.5 billion in Bitcoin for its balance sheet in February, with Musk also announcing that his company would accept payment for its vehicles in Bitcoin. With the world’s richest person hodling Bitcoin, Ethereum, and Dogecoin in his portfolio, he’s demonstrated a willingness to explore crypto utilization in the real world.
Before you get too excited…
But before you start betting the farm on the world’s hottest cryptocurrency, there are a few things to keep in mind.
First, Elon Musk doesn’t own Shiba Inu and has, based on his ownership and tweet history, placed his support behind Dogecoin. Even with Shiba Inu’s rapidly growing community approaching 1 million hodlers, it would be far likelier that the SHIBA reference in the payment processing code is for Dogecoin or is simply a project name placeholder. The chance of Tesla accepting SHIB for payment anytime soon appears to be low.
Second, and arguably far more important, SHIB’s real-world use case is virtually nonexistent. Online business directory Cryptwerk notes that only 137 merchants worldwide currently accept SHIB for payment. That’s a laughably low figure for a digital currency that’s vacillated between No. 9 and No. 11, in terms of largest crypto by market value.
To build on this point, even snagging AMC Entertainment isn’t the win you might think. The potentially high transaction fees tied to paying with SHIB, along with the tax implications of utilizing crypto to pay for goods or services, makes it highly unlikely that Shiba Inu will move the needle much, if at all, for AMC.
And third, cryptocurrencies that deliver life-altering gains in a very short time frame have a notoriously poor track record once they’ve peaked. A number of popular payment coins that generated five-and-six-digit percentage gains ultimately gave back between 93% and 99% of their value following their peak. Chances are good that, with no competitive edge and minimal real-world utility, the same fate will await Shiba Inu once its social media buzz fades.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.