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This investment made people millionaires in 2021 for less than the cost of a cup of coffee

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For over 100 years, one of the smartest and most effective ways to build wealth has been to make your money work on the stock market. Stocks may not outperform housing, gold, or bonds every year, but stocks have generated a significantly higher average annual return over the very long term than these other investment vehicles. In fact, the S&P 500 has achieved on average a total annual return, including dividends, above 11% since the beginning of 1980.

But there is another investment that could have made you extremely rich in 2021, and all it would have needed was loose change on your bedside table.

A few dollar bills and a few coins placed on a payment tray next to a cup of coffee.

Image source: Getty Images.

This top performing asset has made people millionaires with change

It’s no secret that cryptocurrencies have been virtually unstoppable over the past couple of years. This is especially true since the coronavirus crash which hit its lowest point in March 2020. The aggregate value of all cryptocurrencies has grown more than 18-fold to $ 2.56 trillion in 20 months.

While there have been a number of notable four-digit percentage moves since the start of the year in the crypto space, none of these gains have been more mind-boggling than the rally we’ve seen in the memes based coins. Shiba inu (CRYPTO: SHIB).

Take out your magnifying glass, because when the curtain went up in 2021, a single SHIB token cost $ 0.0000000073. As of November 23, these same SHIB coins were selling for 0.00004041. It can be difficult to do the math with so many zeros, but it equates to a gain of 55,356,064% in less than 11 months.

To put this gigantic return into perspective, if crypto investors had bought $ 1.81 from SHIB at midnight on January 1, 2021 and had the luck, stomach and the means to hold onto their investment, it would be worth $ 1,001,945. November 23. 2021. Comparatively, the average cup of coffee in the United States costs $ 2.70. For about two-thirds of the average price of a cup of Joe, investors in Shiba Inu became millionaires in less than 11 months.

A Shiba Inu dog peering at something out of the corner of his eye.

Crypto investors crammed into Shiba Inu-themed coins in 2021. Image source: Getty Images.

Here’s how Shiba Inu made people millionaires so quickly

You might be wondering how an investment could grow over 55,000,000% in less than a year. The response to the historic Shiba Inu race is the result of a multitude of factors.

Perhaps the strongest wind in SHIB’s sails is that it is not easy to short sell digital currencies. Short sellers are investors who bet on the fall of a security. In the case of the world’s largest cryptocurrency Bitcoin, it is relatively easy for the so-called big penny to bet on the downside as Bitcoin has trailing funds and derivatives that allow pessimists to place their bets.

But that’s not the case with most of the lesser-known pieces like Shiba Inu. Without a strong short presence, this created a natural buying bias for SHIB.

The world’s most popular digital currency has also received a boost from a growing number of cryptocurrency exchanges accepting it for listing. More trades allowing the SHIB to be traded means better liquidity, better knowledge of movements and the likelihood of a growing community. As of this writing, Shiba Inu is approaching one million unique wallet holders, according to Etherscan.

To build on this point somewhat, the launch of the decentralized exchange ShibaSwap also helped. ShibaSwap increases liquidity and, more importantly, allows hodlers to wager their tokens to earn passive income. This staking process should encourage investors to hold their coins for longer periods.

The credit also goes to Ethereumco-founder Vitalik Buterin. The mysterious founder of Shiba Inu, known as “Riyoshi”, sent about half of the 1 quadrillion tokens to Buterin. Not wanting to be responsible for Shiba Inu’s future, Buterin donated 50 trillion SHIB to India’s COVID-19 Crypto Relief Fund and sent around 410 trillion SHIB to a dead blockchain address. Since these coins are no longer in circulation, this stock “burned” approximately 41% of the outstanding SHIB tokens.

Finally, the fear of missing out (FOMO) clearly plays its role. After seeing Bitcoin rise by 8,000,000,000% in just over 11 years, crypto investors are convinced that anything is possible with a large enough community and a lot of social media support.

A visibly concerned person staring at a rapidly rising crypto chart and then diving into a tablet.

Image source: Getty Images.

The implosion of Shiba Inu has already started

However, some wins are a little too good to be true. While Shiba Inu has managed to generate historic short-term gains for its hodlers, the future of the world’s hottest cryptocurrency looks pretty bleak.

For example, the story is not on Shiba Inu’s side. Although Bitcoin has managed to generate insane long-term gains, the outlook after five- and six-digit percentage point gains for other payment coins is poor. When I looked at a number of popular payment coins after their peaks, I found that they had all gone down from 93% to 99% in 26 months. As of this writing, the SHIB was already more than 50% below its October 27 high. If history has its say, the SHIB will be crushed in 2022.

Another issue for Shiba Inu is that the part burn is no longer the pilot it once was. Taking 410 trillion coins from circulation with a single click has changed the dynamics of Shiba Inu. But with only a few million tokens burned here and there, the burning of the coins isn’t going to move the needle like it once did.

The median wait time of the Shiba Inu is also lower than that of other popular cryptocurrencies. What this tells us is that investors are in SHIB for fluctuations in momentum and don’t really believe in its long term potential.

But perhaps most worrying is the fact that Shiba Inu has no comparative advantage over other popular payment coins. While his hodlers are good at generating buzz on social media, that won’t force the vast majority of businesses to accept SHIB as a payment method (except for AMC Entertainment). Without any real benefits or positive differentiating elements, the Shiba Inu coin seems destined to fade into obscurity over time.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a premium Motley Fool consulting service. Were motley! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

Sources

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2/ https://www.fool.com/investing/2021/11/27/this-investment-made-people-millionaires-in-2021/

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