What is Shiba Inu coin and why is the price going up? Investors warned about new cryptocurrencies
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SHIBA Inu coins have joined the cryptocurrency market - designed to be an alternative or rival to Dogecoin.
While the cryptocurrency hit an all-time high over the weekend, its is down 7% over the past 24 hours, according to Coinbase.
The value of Shiba Inu soared on the back of a tweet by Elon Musk, and trading volumes shot up too.
The coin has gained some popularity in recent months, especially since it was listed on leading currency site Coinbase in June.
But investors are being warned to avoid the cryptocurrency.
While the price could go up, some analysts say it’s highly unlikely it will ever reach $1 mark as it can't compete with rival Dogecoin.
But buying cryptocurrencies, like any investment, is a risky business and making money is never guaranteed so you'll need to be prepared to lose what you put in.
Cryptocurrencies are also highly volatile, so the value of your investments can go down as well as up in the blink of an eye.
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As always, you should never invest money in something you don't understand.
Below we explain everything we know about Shiba Inu tokens so far and what to keep in mind before investing.
What is the Shiba Inu coin?
Shiba Inu are cryptocurrency tokens and allow users to hold trillions of them, according to its website.
Shiba tokens are listed and incentivized on ShibaSwap, its own decentralized exchange.
The tokens feature the same Shiba Inu dog as Dogecoin, which has rocketed in popularity recently.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, told The Sun previously: "The Shiba Inu coin appears to have been created just to give Dogecoin a run for its money.
"It features the same dog which became a meme, and aims to replicate Dogecoin’s success of turning a joke into a money making machine."
This is something to be aware of when you're considering its legitimacy when making an investment.
The Shiba token website said: "Nicknamed the DOGECOIN KILLER, this ERC-20 ONLY token can remain well under a penny and still outpace Dogecoin in a small amount of time (relatively speaking)."
How much are Shiba Inu tokens worth?
While Shiba is up a whopping 39,835,009.59% in the past year, according to Coinbase - it still comes with a fair share of volatility.
For instance Shiba's last record high was $0.0000388 on May 10 but it dropped significantly after that until rebounding recently.
The value of an investment typically falls if many investors sell off their assets around the same time.
Cryptocurrency markets fell in recent months after a series of worldwide crackdowns on the currencies.
But there has been some positive news coming out of the US, with country vowing not to ban it, unlike China.
Last week, a Bitcoin future exchange-traded fund made its highly anticipated debut.
Dogecoin is currently worth $0.263987 and has also been on the rise following a tweet from Mr Musk.
How risky are the Shiba Inu tokens?
Investing is always a risk but investing in cryptocurrency is an even higher risk as they are VERY volatile, so you should be prepared to lose cash.
There is also no guarantee that you can convert cryptoassests back into cash, as it may depend on the demand and supply in the existing market.
Plus, fees and charges may be higher than with regulated investment products.
Cryptocurrency firms aren't regulated in the way that other financial firms are. This means that you won't have any protection if things go wrong.
Ms Streeter previously said: "Investors should treat trading in crypto currencies with extreme caution, and dabble at the edges of their investment portfolio, only with money they can afford to lose."
While Nigel Green, chief executive of deVere Group, added previously: "Extreme caution should be exercised before investing in un-tested cryptocurrencies.
"The price swings can be expected to be wild and there’s a legitimate risk that investors could get burned.
"There are major differences between the likes of Bitcoin, which runs on cutting edge tech and has a limited supply giving it scarcity value like gold, amongst other valuable attributes; and unknown digital tokens which seemingly have no inherent value."
What are the risks of investing in crypto?
Below we share some of the biggest risks of investing in any cryptocurrency.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
In January, the UK's Financial Conduct Authority warned that households risk losing ALL of their money if they invest in cryptocurrencies.
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Meanwhile, a Russian 27-year-old recently became the world's youngest crypto billionaire after his cryptocurrency Ethereum surged in value.
Who are Dogecoin's founders? We explain all you need to know.
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