If you’re familiar with cryptocurrency, you know that it’s a very volatile investment. Cryptocurrency’s volatility implies that its price tends to change quickly over time. On the one hand, this presents an opportunity for investors to buy crypto for a meager price and sell during peaks. However, this also means that it’s unstable.
You’ll find several strategies you may use to mitigate the risks of investing in crypto. One notable strategy is crypto portfolio diversification, wherein you invest in various cryptocurrencies to minimize the risks involved when investing. This is a common strategy used in stock investing, wherein you invest in stock indexes containing multiple stocks. By diversifying your crypto portfolio, you’ll minimize the overall losses when a few of your assets’ prices dip.
That said, one crypto that you might be interested in adding to your portfolio to increase the variety is SHIB or Shiba Inu. Dubbed by its creators as the Dogecoin killer, SHIB is a meme coin and token under the Ethereum blockchain. Its popularity can be attributed to the fact that the Shiba Inu coin follows Elon Musk for cryptocurrency trading and investment strategies.
To learn if this crypto is worth investing in, consider the following guide:
Why You Might Want To Invest In SHIB
Firstly, to decide if SHIB is worth investing in, you may want to read about the following benefits and advantages of doing so:
Its Price Is Affordable
The first reason you might want to invest in SHIB is that it’s affordable. If you’re new to crypto, you may find this favorable.
Meanwhile, experienced traders and investors may also find its relatively low price favorable because its value has more potential to grow. Thus, investors buying plenty of SHIB may gain significant profit in the future.
Price changes are also easier to track when they’re low compared with more established cryptocurrencies. Traders and investors will need this to assess their portfolios.
SHIB Is An ERC-20 Token
The next advantage of adding SHIB to your portfolio is that it’s an ERC-20 token. ERC-20 tokens are part of the Ethereum blockchain, which may allow you to use SHIB across other Ethereum applications. Besides this, it also means that you can benefit from the developments made in Ethereum, such as improved security and more advanced applications.
Shiba Inu Is Becoming Well-Established As A Cryptocurrency
Even though it isn’t considered an independent cryptocurrency, you may find that Shiba Inu developers are finding ways to improve it. For instance, SHIB developers have created Shibaswap, a decentralized exchange to build the brand of Shiba Inu. You may also use Shibaswap to stake your crypto and gain impressive interest rates.
Furthermore, SHIB is also growing more well-established as a crypto token, given its performance in the market. First, you’ll be pleased to learn that SHIB has surpassed the short-cap status and is now a mid-cap asset. This means that its market capitalization value is more than one billion now.
Why You May Want To Avoid SHIB
The next factor to consider when deciding whether to add SHIB to your crypto portfolio is the possible pitfalls and risks you may encounter. Consider the following reasons you might want to avoid investing in SHIB:
It’s Not The First Memecoin
The first disadvantage of SHIB as a token is that it’s not the first meme coin as it was meant to compete with Dogecoin in the first place. Furthermore, you may find that the market for meme coins is overly saturated, so SHIB has plenty of competitors. As a result, it’ll struggle to gain more market share. Overall, this can negatively impact the token’s value in the long run.
This Crypto Lacks An Independent Blockchain
Another pitfall of the Shiba Inu crypto is that it lacks an independent blockchain. While its status as an ERC-20 asset can be seen as an advantage, this is a double-edged sword. Because SHIB is affected by developments in the Ethereum blockchain, any issues that Ethereum comes across will negatively impact Shiba Inu’s value.
The SHIB Crypto Has Limited Uses
Lastly, another con worth noting about SHIB is that it has limited uses, especially outside the world of cryptocurrency. For instance, only a few vendors accept SHIB as payment.
Furthermore, its status as an ERC-20 token may remain long. This means that its developers will focus more on building new Ethereum applications than improving the token.
Conclusion
Portfolio diversification is no new concept amongst investors, especially those experienced with stocks. Given cryptocurrency’s tendency to be volatile, you may find that diversifying your crypto portfolio may help you mitigate the risks and losses and attain more stability. Hopefully, the guide above has helped you decide whether you should add SHIB to your crypto portfolio to have a more diverse set of assets. With the information presented above, you may consider adding SHIB or conducting further research.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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