Shiba Inu (SHIB) Price Prediction: Can This Meme Token Make a Comeback?

Shiba Inu's (CRYPTO:SHIB) price has declined substantially by 30% during the past month, lagging behind many other cryptocurrencies.

So what gives? Is SHIB stock still a buy after this pullback? Let's quickly review the main reasons for the meme token's month-long decline -- and if it's poised for a big comeback during the next few months.

Shiba Inu's main strengths and weaknesses

Shiba Inu was created as a light-hearted parody of Dogecoin, which itself was a parody of Bitcoin and other cryptocurrencies. But unlike Dogecoin or Bitcoin, Shiba Inu can't be actively mined. Instead, its entire supply of nearly 1 quadrillion tokens was actually pre-mined on the Ethereum (CRYPTO: ETH) blockchain before its launch in 2020. More than 40% of those tokens have already been burned (taken out of circulation).

Shiba Inu also differs from Bitcoin by supporting smart contracts, which can be used to create decentralized apps (dApps), new tokens, and other crypto assets on its blockchain. It recently launched Shibarium, a Layer-2 blockchain network that supports faster transactions and lower transaction fees, which could attract even more developers. Its blockchain network also hosts Shiba DEX, a cross-chain decentralized exchange (DEX) that acts as an official cryptocurrency wallet for its own tokens.

Shiba Inu's backers expect the expansion of that ecosystem to stabilize its price, and for the upcoming launch of a dedicated burn portal on Shibarium to make it easier to reduce the token's global supply. They also likely believe the U.S. Securities and Exchange Commission's (SEC) recent decision to approve the first spot Ethereum exchange-traded funds (ETFs) could pave the way for similar spot price ETFs for Shiba Inu and other altcoins. That's because Shiba Inu uses the same proof-of-stake (PoS) protocol as Ethereum.

Yet Shiba Inu also has three glaring weaknesses. First, a few anonymous whales still hold trillions of its coins and can easily move its price with their huge trades. Second, it doesn't make too much sense for developers to create new apps on Shibarium when they can easily reach a broader audience on bigger PoS blockchains like Ethereum, Solana (CRYPTO: SOL), and Cardano (CRYPTO: ADA). Lastly, only a handful of businesses accept Shiba Inu as a valid payment option -- and it probably won't gain as much mainstream traction as Bitcoin or Ethereum in the foreseeable future.

Why did Shiba Inu's price drop 30% in a month?

As a meme crypto with a market cap of $9.7 billion, Shiba Inu is more prone to volatile swings than other larger cryptocurrencies. The crypto market warmed up again in the first half of 2024 as the approvals of Bitcoin's first spot price ETFs, Bitcoin's halving, and hopes for lower interest rates brought back the bulls. But there won't be any comparable catalysts for the sector in the second half of the year -- and interest rates could stay elevated as the Federal Reserve shies away from aggressive cuts.

That's why many cryptocurrencies retreated during the past month, but Shiba Inu also faces its own specific issues. Its network activity has declined sharply across its new, active, and zero-balance addresses while its funding rate (the difference between its perpetual price and index value) turned negative. In other words, it's trading at a discount to its spot price as the short-sellers seemingly overpower the complacent bulls.

That decline was disappointing, but Shiba Inu has still risen about 65% year-to-date. It's also more than doubled during the past 12 months, and plenty of investors remain bullish on its long-term potential. Coinpedia estimates that Shiba Inu's price can rise about 270% to $0.00006697 per token this year in a bull market scenario.

So for now, Shiba Inu is still a speculative meme coin that could be easily cut in half before it doubles. I personally wouldn't touch it right now, but it might be an interesting bet for investors who can stomach a lot of volatility.

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