Why Shiba Inu Is Becoming a Risky Bet for its 1.5M Holders

In the Shiba Inu ecosystem, several factors ranging from leadership concerns to slow ecosystem growth highlight increasing risks for its 1.5 million holders. 

Shiba Inu remains among the most popular cryptocurrencies globally, retaining its position as the second-largest meme coin by market capitalization. It has grown from having just a few holders to more than 1.5 million on-chain holders within five years of its existence.

Although Shiba Inu has made significant progress in transitioning from a meme token into an ecosystem with multiple projects, several challenges are beginning to weaken confidence among investors.

Last month, he went silent on X for over a month, only resurfacing this week after growing speculation that he had abandoned the Shiba Inu project.

His return came just days after the Shibarium bridge suffered a roughly $3 million exploit. Although he did not directly address the concerns about the exploit, he reassured the community of his commitment to advancing SHIB.

Trust and Identity Concerns

Kusama’s continued reliance on anonymity has raised trust issues within the community. Since Shiba Inu’s launch in August 2020, no team member has revealed their real identity, with all communication conducted under pseudonyms.

While anonymous leadership may have been appealing in the project’s early days, it has become a liability as Shiba Inu attempts to establish itself as a legitimate ecosystem. Institutional investors and regulatory bodies often require clear accountability.

This may help explain why Shiba Inu has not yet seen a spot ETF application in the U.S., while competitors like Dogecoin have already attracted multiple filings.

Low Shibarium Volume and Recent Hack

Launched in August 2023, Shibarium’s initial success was outstanding. The Layer 2 blockchain reached 1 billion transactions in under two years after its launch. However, its volume has dropped significantly in recent times.

Since this month, Shibarium has processed an average of less than 1 million daily transactions, which is relatively low compared to its competitors. As of September 17, the network processed only 11,060 transactions over the past 24 hours.

This declining transaction volume raises concerns about Shibarium’s adoption. It also raises questions about whether the network can genuinely become a hub for decentralized finance (DeFi) projects.

Amid falling volumes, Shibarium was recently hit by a major security breach, in which attackers exploited its bridge to siphon over $3 million. While developers quickly froze the staking function to contain the damage, the incident has further shaken user confidence in the platform’s security.

Lack of Strong Partnerships

A major shortcoming for Shiba Inu is its lack of influential partnerships in recent times. While other blockchain projects frequently secure collaborations with major companies and institutions, Shiba Inu has struggled in this area.

The few alliances it has formed have had a limited impact on adoption. Without strong external support, Shiba Inu risks stagnation in an increasingly competitive crypto landscape.

Team’s Involvement in Other ICOs and Promotions

Another red flag for investors is the apparent involvement of Shiba Inu team members in unrelated initial coin offerings (ICOs) and crypto promotions.

For instance, Kusama has publicly backed other cryptocurrency projects, including SHY and Position Exchange’s native token (POE). These actions raise questions about the team’s dedication to Shiba Inu.

Instead of dedicating full attention to SHIB’s roadmap, the team’s diversion into external ventures suggests that it may not be prioritizing the project’s long-term success.

Low Burn and Community Hype

Over the years, Shiba Inu’s price growth has been largely driven by community hype rather than strong fundamentals. Many holders believed its burn campaign could push SHIB to higher targets, such as $0.01.

However, the burn campaign has lost momentum. For example, only 69,880 SHIB were burned in the past 24 hours, a minuscule amount considering there are still over 589 trillion tokens in circulation.

The low burn rate highlights the difficulty of sustaining price growth without more aggressive deflationary mechanisms or increased utility.

In Sum

While Shiba Inu retains a loyal community and a large holder base, the project is facing a growing list of challenges.

Leadership murkiness, declining network usage, a lack of strategic partnerships, and waning development focus are all increasing the risks for investors. Without renewed focus and stronger fundamentals, Shiba Inu may struggle to maintain relevance in the evolving crypto market.