Shiba Inu Is Outperforming Bitcoin in 2024, and It’s Not Even Close. But Does That Make It a Buy?

The capital markets are off to a sizzling start so far in 2024. The S&P 500 and Nasdaq Composite have each gained approximately 11% thanks to artificial intelligence euphoria, a strong energy market, and new breakthroughs in the pharmaceutical sector.

However, investors have plenty of alternative options outside of the capital markets. In recent years, cryptocurrency has emerged as a popular choice for investors beyond stocks and bonds.

With its price up 69% so far this year, Bitcoin (BTC -0.59%) has handily outperformed the broader market.

And yet, would you be surprised to learn that there is another crypto token outperforming Bitcoin this year? As of the market close on May 20, the price of Shiba Inu (SHIB -0.90%) has soared 136% — nearly double that of Bitcoin.

Let’s break down whether Shiba Inu is right for you and whether the token represents a more lucrative option than Bitcoin for crypto investors.

Bitcoin vs. Shiba Inu: What to know before investing

When it comes to cryptocurrency, Bitcoin is probably the most well-known. While it is not yet completely a staple among modern currency transactions, Bitcoin is becoming increasingly utilized and accepted as a means of payment.

While crypto generally has a more polarizing reputation compared to more established asset classes, Bitcoin is often referred to as “digital gold” given its reputation as a unique value during volatile economic periods.

Outside of Bitcoin, there are myriad cryptocurrencies. A common misconception is that each of these tokens represents a competing product to Bitcoin. This isn’t really the case. In fact, many cryptocurrencies lack any real utility and become relevant for the wrong reasons.

You may recall that a token called Dogecoin briefly came onto the scene a couple of years ago after personalities like Elon Musk and Mark Cuban seemingly endorsed its applications.

While a degree of humor can be appreciated here, prominent CEOs and investors should refrain from commentating on anything too specific about the markets.

The reason? Well, following Dogecoin’s approval from multiple billionaires, amateur retail investors poured into the token. This resulted in outsize momentum fueling the price of Dogecoin, leaving many investors as bag holders.

This is where Shiba Inu comes into the picture. Like Dogecoin, Shiba Inu is categorized as a meme coin. It is not considered anywhere near as prolific or sophisticated as Bitcoin, and its price reflects that.

With 1 quadrillion tokens in total supply, Shiba Inu currently trades at a price of $0.000026. Since the value is less than a penny, Shiba Inu is essentially worthless.

At a price of roughly $69,000, Bitcoin is very much determined by supply and demand. In contrast, the prices of Shiba Inu and most meme coins are merely a reflection of their current sentiment on social media.

Image source: Getty Images.

The bottom line

While the percent return of Shiba Inu so far in 2024 looks impressive, this is clearly an example of the law of small numbers. In other words, a triple-digit return may give credence to a lucrative opportunity. However, Shiba Inu’s upside potential is likely more psychological than real.

Furthermore, given the number of tokens exchanging hands, it will take an enormous number of bullish investors buying (and holding) Shiba Inu before its price even reaches a penny — let alone a dollar.

Although crypto is widely considered a risky investment compared to stocks or bonds, investors might want to consider some exposure for diversification purposes.

But with that said, I’d encourage investors to avoid meme coins. A good analogy would be to consider meme coins to be similar to penny stocks.

Just as with stocks, crypto investors should seek established and proven opportunities. Right now, Bitcoin takes the cake in those regards and is a much safer choice than Shiba Inu — regardless of what the percentage returns look like at first glance.