Bitcoin (CRYPTO: BTC) is the world’s biggest cryptocurrency. Its market capitalization of $1.3 trillion accounts for more than half of the market cap of the entire crypto market, which currently stands at $2.4 trillion.
The crypto industry went through a challenging bear market in 2022 following the collapse of a number of high-profile projects and exchanges. However, Bitcoin is up 53% this year, and it’s trading near a record high on the back of renewed positivity among investors.
That bullish sentiment appears to be spreading to all corners of the crypto market. Shiba Inu (CRYPTO: SHIB) is sitting on a year-to-date gain of 79%, so it’s doing even better than Bitcoin at the moment. It isn’t the first time this meme token has outperformed the industry leader, because it delivered one of the best gains in the history of financial markets in 2021.
However, here’s why investors shouldn’t expect Shiba Inu to outperform forever.
Image source: Getty Images.
The financial industry is embracing Bitcoin, while shunning speculative tokens
Bitcoin is a decentralized cryptocurrency, which means it isn’t controlled by any single person or government. Supply is capped at 21 million coins, and it operates on the blockchain, which is an autonomous, reliable system of record. Therefore, many crypto enthusiasts consider Bitcoin a viable alternative to traditional money, because supply can’t be manipulated or “printed” to degrade its purchasing power.
However, adoption has been lackluster. Only 9,224 businesses worldwide accept Bitcoin as payment for goods and services, (according to Cryptwerk), and if people can’t spend it at their favorite stores, they don’t have much incentive to own it. Volatility might be one reason merchants are reluctant to enter the ecosystem — any currency that can plunge in value by more than 50% in a single year (as Bitcoin did in 2022), with the potential to rise unpredictably by a similar amount, makes cash flow management a nightmare.
As a result, many investors prefer to look at Bitcoin as a store of value, sort of like a digital version of gold. That use case received further validation when the U.S….
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