The crypto bull cycle is far from over and throughout 2021, two memecoins became the surprise winners in terms of having almost parabolic price appreciation. The astonishing yearly gains of dogecoin, and its underdog rival shiba Inu, have stolen the limelight from the more serious crypto-offerings such as bitcoin and ethereum.
The steep appreciation in the value of the world’s two major memecoins saw a marked shift in media attention from the blue-chip cryptocurrencies, such as ethereum and bitcoin, to the rivalry of dogecoin and shiba inu and their dubious use cases.
By August, Google searches for shiba inu and dogecoin had dwarfed searches for the more serious crypto offerings. Mainstream media outlets were quick to capitalise on the growing interest to exploit the higher audience engagement for increased advertising revenues. Recent data from BrokerChooser analysed the online search volume of all cryptocurrencies and found that shiba inu topped the list of most actively searched cryptocurrency throughout the year.
A statement from BrokerChooser said: "Shiba inu coin had just 70 Google searches in September 2020, but its popularity has exploded in the last year, with 1.5 million people searching for ‘shiba inu coin’ in September 2021, an incredible increase of 2.1m%."
Former banker and CEO of London Real, Brian Rose, spoke to Yahoo Finance about the unlikely rise of dogecoin, which began life as a “joke” response to the reverential sentiment surrounding bitcoin, and the even greater price hike of its younger spin-off shiba inu.
The former Wall Street veteran said both canine coins had understood and capitalised “community”. Citing the market capitalisation of the world’s second-largest memecoin, Rose pointed out that shiba inu is a “community worth $20 billion(£15.2m)”.
He added that “Shiba Inu as a cryptocurrency and a memecoin doesn't make sense, but what they get is community. They are presently tracking and quantifying a community on the blockchain and you can’t ignore the value of this.”
A new survey from uk.Investing.com found that 35% of investors who contributed in the poll plan to invest in shiba inu coins in the coming year. Sergey Panchenko, Founder of Punch Pro Digital, told Yahoo Finance that the coin's growth was due to it having a very convenient price threshold for entering the market which many people can afford.
He added that “the demand for memecoins has not yet reached its peak, and at any moment these tokens will surprise us. I am waiting for shiba inu to appear on Binance, which will fuel the coin to access new heights”.
The increased media coverage that the coins achieved throughout the year catalysed the fear of missing out – FOMO – a motivation that has been the main driver behind the success of both coins.
At the beginning of January 2021, shiba inu's price lay stagnant until May 2021 when the price jumped by more than 300% after Elon Musk mentioned he was planning to get a Shiba Inu puppy. Musk quickly attained the moniker of 'The Dogefather' after his tweets about Dogecoin accumulated throughout the year.
The price of shiba inu has piggybacked on the popularity of its older sibling. Musk’s most recent promotion of dogecoin came in a Time magazine person of the year interview this month when he stated, “Dogecoin is better suited for transactions because its total transaction flow has a much higher potential than Bitcoin… and it encourages people to spend it rather than horde it as a store of value.”
Musk added a major boost to the wider adoption of dogecoin on Tuesday 14 December when he announced that Tesla will now accept the memecoin as payment for the company’s merchandise on a test basis. He tweeted: "Tesla will make some merch buyable with Doge and see how it goes.” The immediate effect of this was to see the price of the world’s premier memecoin jump by 20% in value.
Watch: 'UK's depleted gold reserves could be replenished with 'digital assets'
The high point in the Tesla CEOs relationship with dogecoin came when he hosted the US sketch comedy and variety show Saturday Night Live on 8 May 2021. Dogecoin adherents were poised for the influential billionaire to make an explicit promotion of their memecoin on live television. There was a buying frenzy in the lead up to the broadcast, but the much hoped-for promotion failed to materialise and instead Mr Musk made an off-hand remark about "the world's fun and friendly internet currency".
On the prime-time programme he was asked by comedian Michael Che Swap if dogecoin was a hustle. Musk shrugged and replied, “yeah it's a hustle”. This was less than the Dogecoin community had hoped for.
The trajectory of shiba inu's price seemed to be pegged to that of Dogecoin throughout the year until it began to accelerate and outpace its older rival. Shiba inu flipped dogecoin in terms of market capitalisation at the end of October, when it jumped to eighth position when its market cap swelled to $41.91bn, knocking its rival canine coin into ninth place for a brief period.
What followed were many mainstream media headlines of wealth accumulation by holders of shiba inu and dogecoin. One such story that reached mainstream news headlines was the anonymous shiba inu holder who purchased $8,000 of the token in August 2020, which then skyrocketed to a value of $5.7 billion in October 2021. However, whether the shiba inu market had the liquidity and price stability to allow a cashing out of that amount was never tested.
Many crypto-experts fret that the explosion of memecoins has damaged the cause of cryptocurrencies – its philosophy being the decentralisation of power and responsibility into the hands of currency holders.
Has dogecoin and shiba inu damaged the reputation of the blue-chip cryptocurrencies like ethereum and bitcoin? Brian Rose states that although on the surface the memecoins give crypto a bad name, “they also act as a ‘gateway drug’ into the world of cryptocurrencies and allow people to start a conversation with money that many have never had in their life beforehand”.