Update on May 17: Vitalik Buterin announced that he burned 90% of all Shiba Inu coins in his possession. This was an advantageous move for SHIB; this increases its scarcity by diminishing its supply. The May 16 announcement caused Shiba Inu to surge by 58% on Sunday.
Note: This is not financial advice. This is for educational purposes only. Please note that cryptocurrency is a highly volatile asset class; only invest what you can afford to lose.
"Why is Shiba going down?" is the question on investors' minds as the canine crypto's price plummets to devastating lows. Some say that Vitalik Buterin, Ethereum's founder and the world's youngest crypto billionaire, is to blame for Shiba's heart-stopping drop. However, Shiba was already taking a nosedive before Buterin rattled the crypto world.
On May 10, Shiba scored a Binance listing as $SHIB. This caused SHIB to skyrocket by 164%. On May 9, it was trading at around $0.000014. The next day, it surged to an all-time high of $0.000037. As early investors took profit, SHIB's price dropped sharply.
Rubbing salt on Shiba holders' wounds, Buterin donated $1 billion worth of Shiba Inu tokens to charity on May 12, according to CryptoSlate.com. You may be wondering, "Why are people so upset over Buterin's philanthropic efforts?" In order for you to understand the masses' mixed reaction, you need to know how SHIB's token supply was distributed last year.
Why Shiba holders are fuming at Vitalik Buterin
The founder behind Shiba Inu coin is an anonymous person called Ryoshi (a pseudonym). According to SHIB's white paper, Ryoshi sent half of SHIB’s token supply to Buterin's wallet.
Ryoshi didn't specify his motives behind gifting Buterin with SHIB, but he did state the following: "There is no greatness without a vulnerable point, and as long as [Vitalik Buterin] doesn't rug us, then Shiba will grow and survive." Yikes! That didn't age well.
Ryoshi expected Buterin to sit on a heap of Shiba Inu coins and do nothing with them, but as now know, Buterin had other plans. Ryoshi isn't the only coin founder to pull this stunt; the crypto founders behind Akita Inu and Dogelon also gifted Buterin with coins. Buterin's wallet is public, so this is likely a publicity stunt.
#Analysis Vitalik Buterin’s Ethereum wallet holds $8 billion in Shiba Inu coin (SHIB) https://t.co/1aGD3Uw7rl pic.twitter.com/F1O8XuAiFdMay 10, 2021
However, the founders' marketing ploy went awry when Buterin sold 660 billion SHIB, 140 billion AKITA and 43 billion ELON.
Although Buterin technically didn't do anything wrong (he sold his gifted tokens for a good cause), his philanthropic efforts caused worldwide panic. "Shiba coin proceeded to tank in value immediately after Buterin’s donation was disclosed — perhaps because buyers and sellers expected the billionaire to soon liquidate his holdings," Recode said.
SHIB token holders are fuming at Buterin; their dreams of making a profit from Shiba Inu coin seems to be slipping further and further away.
Elon Musk's announcement that Tesla will no longer be supporting Bitcoin payments also contributed to SHIB's drastic drop. All in all, this week wasn't a good day for all cryptocurrency investors — not just SHIB token holders.
Tesla & Bitcoin pic.twitter.com/YSswJmVZhPMay 12, 2021
On the plus side, virtual currencies are known for being highly volatile, so there's a good chance that Shiba Inu and other affected digital assets will rebound. There is a silver lining here: price drops mean that investors can buy into their favorite altcoins at dirt-cheap prices.
Note: This is not financial advice. Virtual currencies are a highly speculative asset class; always make sure to exercise proper risk management.
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Kimberly Gedeon, holding a Master's degree in International Journalism, launched her career as a journalist for MadameNoire's business beat in 2013. She loved translating stuffy stories about the economy, personal finance and investing into digestible, easy-to-understand, entertaining stories for young women of color. During her time on the business beat, she discovered her passion for tech as she dove into articles about tech entrepreneurship, the Consumer Electronics Show (CES) and the latest tablets. After eight years of freelancing, dabbling in a myriad of beats, she's finally found a home at Laptop Mag that accepts her as the crypto-addicted, virtual reality-loving, investing-focused, tech-fascinated nerd she is. Woot!