Everyone loves a puppy pic, especially, it turns out, cryptocurrency traders.
The Shiba Inu coin, a cryptocurrency alt coin launched last year, surged over 400% this week, hitting a peak market cap of nearly $14 billion on Thursday, making it nearly as valuable as fashion brand Prada. The price of Shiba Inu coin has since dropped by roughly a third, but the midweek rally made it the 12th most valuable cryptocurrency at one point, marking a breakout week for an asset, inspired by a dog breed, that can easily be mistaken for a joke.
A tweet from crypto enthusiast and Tesla CEO Elon Musk seemed to kick off the trading surge. “Floki Frunkpuppy,” Musk tweeted on Oct. 4 alongside a photo of his new Shiba Inu puppy, named Floki. Shiba Inu coin jumped 40% in the hours after Musk’s tweet.
“The surge in SHIB (Shiba Inu coin) was most definitely kicked off by Musk’s tweet,” says David Hsiao, CEO of crypto magazine Block Journal. “Mundane actions like the tweet can be overly interpreted by the crypto community, and the response can be pretty wild.” Even with this week’s jump, a single Shiba Inu coin is worth less than one-hundredth of a penny.
Musk’s tweet also sparked rallies in other dog-related coins.
The price of Dogecoin, the most mainstream and valuable dog-themed coin, shot up 25% in the days following Musk’s tweet. Dogecoin’s price has since dropped from a peak of $0.27 per coin to $0.24, giving it a market cap of $32 billion.
Some dog coins were created to coincide with the arrival of Musk’s puppy. “My Shiba Inu will be named Floki,” Musk wrote on June 25, spawning the creation of coins like Floki Inu, Shiba Floki, and Flokinomics. Each of those coins shot up in the days after Musk’s puppy tweet, with Flokinomics going up by 1,425% over one 24-hour period. The price of Floki Inu coin is up roughly 40% since before Musk’s latest tweet and up over 300% since Musk’s first puppy tweet in September.
“Our community, known as the ‘Floki Vikings,’ were so excited that they all went to engage with Elon Musk’s tweet after he tweeted,” says a representative for Floki Inu.
But the surge in Shiba Inu coin may also reflect broader gains in cryptocurrency this month. After all, Musk tweeted about the arrival of his dog Floki in mid-September, leading to a 50% spike in Shiba Inu’s price.
“The reaction [to Musk’s puppy pic] was also likely amplified due to such a simultaneously strong performance from Bitcoin,” says Hsiao. “Musk’s tweet probably created a snowball effect, causing the price to skyrocket lately.”
Shiba Inu launched in 2020 as a self-proclaimed killer of the Dogecoin, a popular meme coin launched in 2013, and skyrocketed for the first time earlier this year due, in large part, to hype surrounding Elon Musk’s appearance on Saturday Night Live.
But the coin also gained attention in May when Vitalik Buterin, a cofounder of Ethereum, donated 50 trillion Shiba Inu coins, or half the total supply, to the India Crypto Covid Relief Fund as part of an estimated $1.2 billion donation to help combat a growing COVID-19 crisis in India. (Shiba Inu’s founder, who goes by Ryoshi, had entrusted Buterin with half of the coin’s value because of his godlike status in the crypto world. Read the “Woofpaper” here for more explanation of the philosophy behind the Shiba Inu coin.)
Buterin’s donation amounted to half the total supply of Shiba Inu coins, but the shock of his donation threatened to tank the price of the coin and effectively make his Shiba Inu giveaway worthless.
But the crypto relief fund says it has turned the donation into real value, offloading the Shiba Inu assets into more widely used coins like Etherium and stablecoins tied to the U.S. dollar. After Buterin’s donation, Shiba Inu’s value dropped by about half before stabilizing at a market cap of roughly $3 billion. Buterin’s Shiba Inu donation is now worth roughly $464 million to the relief fund.
The relief fund says that the Shiba Inu coin donation has been part of the $38 million it has contributed to relief efforts in India so far, which has included a $15 million donation to Unicef to procure 15 million vaccine syringes.
“We are already discussing [more] projects around [the] Indian health care ecosystem,” a spokesman for the relief fund says. “This includes health infrastructure augmentation and training of medical professionals.”
For now, the Shiba Inu coin also appears be propped up by a strong and growing community, even if its members have less lofty goals than helping solve a global health crisis.
Shiba Inu’s Twitter account now has over 1 million followers, and the coin has an active Reddit community and Telegram channel.
On Friday, the main Telegram message board was flooded with Shiba Inu holders pleading with skeptics to hold the coin as the price of Shiba Inu continued to drop.
“Hey people who are speaking bulls&*t about Shiba, we have proved you…wrong a million times and will do it again,” one message said.
The community may be able to keep Shiba’s floor from dropping too low. But ultimately the dog-coin hype might not have the staying power it used to.
“The dog-coin hype has slowed down significantly over the last few months and there are many other points of focus in the industry lately with far more substance, such as DeFi [decentralized finance] and NFTs,” says Hsiao. “The price effect from hype and rumor can only last so long.”
Still, some are confident in Shiba Inu’s potential. On Wednesday, Crypto.com, a major cryptocurrency exchange, launched a “SHIB Trading Campaign,” giving Shiba Inu coin buyers a chance to win Shiba-themed NFT artwork and more coins.
“SHIB is a very young, low-priced coin, so it’s hard to draw conclusions about its staying power yet. [But] the community seems to be active, which is a good sign for future growth,” says Kris Marszalek, CEO of Crypto.com. He says that pressure from Crypto.com customers pushed the firm to launch the new campaign. “Our community loves Shiba.”
Subscribe to The Ledger for expert weekly analysis on fintech’s big stories, delivered free to your inbox.
