Jump in Shiba Inu breed-themed tokens is unsustainable, crypto traders warn
Tokens modeled after the Shiba Inu dog breed could see imminent sell-offs ahead after days of outperforming the broader crypto market.
On Monday, Elon Musk-owned social media app Twitter replaced its popular blue bird logo with that of Dogecoin’s Shiba Inu mascot. Dogecoin (DOGE) prices rose almost immediately – with futures markets hitting record highs – as some bet on increased use of dogecoin on the Twitter platform.
This surge saw several other Shiba Inu-themed memecoins jump multiple times, with the sector jumping 14% on average. Tokens with big chunks like shiba inu (SHIB) rose up to 10%, while small indices like floki (FLOKI), kishu inu (KISHU) and babydogecoin (BABYDOGE) rose as much as 25%.
Memecoins on newer blockchains had their moment too. Some dog-themed tokens, such as zkDoge and zkShib on the zkSync blockchain, which launched in March, recorded gains of as much as 100%.
Such gains are unlikely to last in the long term, but some traders warn that such moves are not indicative of a broader trend.
“We don’t think it’s indicative of a long-term bull run. Quite the opposite,” Guilhem Chaumont, CEO of crypto trading firm Flowdesk, said in a Telegram message. “There is a regular pattern of crypto market emerging with first, bitcoin going through a bull run, then big altcoins pumping, and finally, tokens with small market caps.
“Since bitcoin has experienced a relatively stable upward trend, the rise of memecoins would indicate the third phase, the end of the cycle. But there is no need to overinterpret such instantaneous price changes,” said Chaumont.
It’s a sentiment shared by Bonnie Cheung, chief strategy officer at crypto developer Sending Labs. “Sentiment for memecoins is not new and this means there is a high potential for growth to slow down as usual in a few days,” Cheung said.
There could still be long-term growth for these tokens if their fundamentals strengthen in the coming months.
“For example, Shiba Inu is gaining additional traction through the launch of Shibarium, its layer-2 protocol built on the Ethereum blockchain. Dogecoin’s recognition by Twitter and the payments world is also growing, and these trends could help register more sustained growth in the long term,” noted Cheung.
Meanwhile, some believe Twitter’s move could pave the way for mainstream crypto adoption.
“Musk’s supportive tweets and the recent decision to add the Dogecoin logo to Twitter are helping to keep both DOGE and SHIB in the public conversation,” Kadan, CTO of blockchain network Komodo, said in an email to CoinDesk.
“Whether one supports meme coins or not, it is impossible to deny that Musk is driving mainstream adoption of crypto and creating media attention that would not otherwise exist. This is certainly a net positive for the crypto space as a whole,” they added.
