Why Shiba Inu Is Thumping the Broader Crypto Market Today

What happened

Since late afternoon yesterday, the price of meme token Shiba Inu (SHIB 6.76%) traded 16.5% higher as of 10:25 a.m. ET today, which is soundly ahead of the broader crypto market this morning. Investors are very excited about the launch of Shibarium.

So what

Shiba Inu was launched as a joke and essentially a spinoff of Dogecoin, utilizing Dogecoin’s mascot, the Shiba Inu canine, to generate buzz. The plan has by and large worked well, with Shiba Inu rising to a nearly $7.3 billion market cap.

But as an ERC-20 token running onEthereum’s network, Shiba Inu didn’t really have much to offer from a unique technical or utility perspective. That could be about to change with the upcoming launch of Shibarium, which is a Layer 2 protocol that will essentially sit on top of Ethereum and act more like Shiba Inu’s own network.

The Shibarium network will be able to ease congestion from Ethereum and make transactions on the network potentially faster and cheaper. Shibarium is expected to support Shiba Inu and will also be used for the metaverse, non-fungible tokens (NFTs), and other gaming functions.

Additionally, Shibarium will have a burning mechanism that will help reduce Shiba Inu’s massive supply and potentially set up a better supply-and-demand dynamic for the token.

“Patience is key, and some see Shibarium as a price-pumping tool, but that is not the project’s focus and never has been,” the Shiba Inu developers wrote in a recent blog post. “Shibarium is being built to fulfill Ryoshi’s vision and provide the community with a tool to build and grow the project on their own terms.”

Now what

With the price ofBitcoin only up slightly over the last 24 hours and many cryptos in the red today, it is clear that excitement over Shibarium is driving Shiba Inu’s rise this morning.

I’ve never been interested in Shiba Inu before because I didn’t see anything unique about the cryptocurrency, other than its ability to generate buzz and go viral. However, this Shibarium development is certainly intriguing.

I think it’s too early to tell if this will truly be a game changer, but I will be watching this development with more of an open mind.

Bram Berkowitz has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.