How Elon Musk has inflated the price of Shiba Inu coin by tweeting about his dog
The value of meme cryptocurrency Shiba Inu coin shot up by around 45 per cent on Monday – and once again the price jump is being attributed to Elon Musk.
The coin is still worth well below a penny, and is currently trading at £0.00000947, according to Coinbase.
But this is up from £0.00000570 on Sunday. The coin has now surged by around 8,000 per cent in the last year.
On its website, Shiba Token calls itself “an experiment in decentralised spontaneous community building”. It is listed on its own decentralised exchange called ShibaSwap. According to Binance, the total supply of Shiba Tokens is one quadrillion (1,000,000,000,000,000) and the current circulating supply is 100 per cent. The Shiba Token website says 50 per cent of the total supply has been locked to Uniswap, a decentralised finance protocol that facilitates automated transactions between cryptocurrency tokens on the Ethereum blockchain. The remaining 50 per cent was burned to Ethereum co-founder Vitalik Buterin. “Everyone has to buy on the open market, ensuring a fair and complete distribution where devs don’t own team tokens they can dump on the community,” the website states. However, according to Binance, “the top no 1, no 2 and no 5 wallets hold 50.5 per cent, 7 per cent and 3 per cent of total supply respectively”. The coin’s mascot is the Shiba Inu dog, the same breed that represents Dogecoin. It has also nicknamed itself the “Dogecoin Killer”.
The reason behind Shiba’s price surge shows exactly how volatile meme cryptocurrencies like this can be – Musk tweeted a picture of his dog.
Musk bought a pet Shiba Inu in September, and called it Floki. On Monday he tweeted a picture of the puppy with the caption “Floki Frunkpuppy”.
The tweet did not even have anything to do with Shiba Inu coin, but it was enough to send his supporters flocking to buy the coin, therefore boosting its value.
It goes without saying that any currency that can be so heavily influenced by someone tweeting a picture of their dog is far from a stable investment. While such currencies can make you money, anyone investing should be prepared to lose everything they put in.
Musk has often shown an ability to influence the cryptocurrency market – even coins as large as Bitcoin.
He has previously been a vocal supporter of Dogecoin, on which Shiba Inu coin is heavily based, though it has never been clear how much of that support is a joke.
The Financial Conduct Authority (FCA) warned in January: “Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money.
“If consumers invest in these types of product, they should be prepared to lose all their money.”
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown previously explained the risks to i.
She said: “On top of being extremely volatile, most cryptocurrencies are unregulated, which not only adds another layer of uncertainty but also means that investors have little or no protection against fraud.”