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

For over 100 years, one of the smartest and most effective ways to build wealth has been putting your money to work in the stock market. Stocks may not outperform houses, gold or bonds every year, but stocks have delivered significantly higher average annual returns than these other investment vehicles over the very long run. In fact, the S&P 500 has averaged an annual total return, including dividends, of more than 11% since the early 1980s.

But there’s another investment that could have made you hugely rich in 2021, and all it would have needed was the change on your nightstand.

Image source: Getty Images.

This top-performing asset turned people into millionaires with change

It’s no secret that cryptocurrencies have been virtually unstoppable in recent years. This has been especially true since the coronavirus crash that bottomed out in March 2020. The total value of all cryptocurrencies has skyrocketed more than 18 times to $2.56 trillion in 20 months.

While there have been some notable four-digit percentage moves in the crypto space, none of these gains have been more overwhelming than the rally we’ve seen in meme-based coins. Shiba Inu (CRYPTO:SHIB).

Get your magnifying glass out, because when the curtain went up in 2021, a single SHIB token cost $0.00000000073. As of November 23, the same SHIB coins went for $0.00004041. It might be hard to do the math with so many zeros in the way, but this equates to a gain of 55,356.064% in less than 11 months.

To put this gargantuan return into perspective, if crypto investors bought $1.81 worth of SHIB at midnight on January 1, 2021, and had the luck, stomach, and resources to hold onto their investment, it would have been $1,001,945 be worth on November 23. 2021. By comparison, the average cup of coffee in the US costs $2.70. For about two-thirds the cost of the average cup of Joe, Shiba Inu investors became millionaires in less than 11 months.

Crypto investors have piled on Shiba Inu themed coins in 2021. Image source: Getty Images.

This is how Shiba Inu made people millionaires so fast

You may be wondering how an investment can grow by more than 55,000,000% in less than a year. The answer to Shiba Inu’s historical run is the result of many factors.

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

But that is not the case with most lesser known coins such as Shiba Inu. Without a large short-selling presence, it has 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 exchanges through which SHIB can be traded means better liquidity, improved movement awareness and the opportunity for a growing community. At the time of writing, Shiba Inu was approaching 1 million unique wallet holders, according to Etherscan.

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

Credit also goes to Ethereum co-founder Vitalik Buterin. The mysterious founder of Shiba Inu who goes by the name “Riyoshi” sent about half of the 1 quadrillion token supply to Buterin. Not wanting to be responsible for the future of Shiba Inu, Buterin donated 50 trillion SHIB to the India Crypto COVID-19 Relief Fund and sent about 410 trillion SHIB to a dead blockchain address. Since these coins are no longer in circulation, this action “burned” approximately 41% of the outstanding supply of SHIB tokens.

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

Image source: Getty Images.

The Shiba Inu implosion has already begun

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

For example, history is not on Shiba Inu’s side. While Bitcoin has managed to make insane longer-term gains, the outlook for other payment currencies after five- and six-digit percentage point gains is bleak. When I researched a number of popular pay coins after their peaks, I found that they all fell 93% to 99% within 26 months. At the time of writing, SHIB was already more than 50% below its October 27 high. If history has its say, SHIB will be thrashed in 2022.

Another problem for Shiba Inu is that coin burning is no longer the driver it once was. Taking 410 trillion coins out of circulation at the touch of a button changed the dynamics of Shiba Inu. But with only a few million tokens burned here and there, burning coins won’t move the needle like it once did.

The median hold time for Shiba Inu is also lower than other popular cryptocurrencies. This tells us that investors in SHIB are for momentum swings and don’t really believe in its long-term potential.

But perhaps most concerning is the fact that Shiba Inu has no comparative advantages over other popular payment coins. While the hodlers are good at generating buzz on social media, that won’t force the vast majority of businesses to accept SHIB as a form of payment (except for AMC entertainment). With no real benefits or distinguishing positives, the Shiba Inu coin seems to fade into obscurity over time.