The quirkiness of the crypto world developed a price tag this week.
The shiba inu coin passed dogecoin in total value, which means a token that started life as a meta joke beat the original, itself a parody of crypto mania. Then there's squid coin, the once-hot new currency based on the Netflix hit, which suddenly collapsed in an apparent scam.
The twin developments underlined the perils of crypto hype, but also the power of community, even with offerings that weren't meant to be taken seriously. And they showcased the perplexing challenges faced by businesses hoping to tap into crypto enthusiasm as more and more investors demand it be taken seriously as an asset class.
Shiba inu coin was "the joke of a joke, the meme of a meme," said Tad Park, CEO of the crypto investment fund Volt Equity. Yet heavy trading pushed the coin to become the ninth-largest cryptocurrency with a total value of more than $37 billion, moving past dogecoin which slipped to 10th at roughly $36 billion.
It was an impressive rally for a token that launched just last year as a "dogecoin killer," according to its creator, who's known only as Ryoshi.
While it didn't "kill" dogecoin, the shiba inu coin exploded in popularity "largely due to its community-driven price appreciation," Jesse Proudman, CEO of crypto robo adviser Makara, told Protocol. "The more people that learn about it, the more people buy it, and the network effect holds. It's the perfect example of how reflexive these markets are."
Where dogecoin still holds an edge is in mainstream acceptance. Robinhood, Coinbase and even SoFi allowed trading in dogecoin as that token gained popularity.
It's been harder to find crypto exchanges and brokers that support shiba inu coin, but a wave of pressure from fans has led some to add it.
Coinbase added the token in September, part of CEO Brian Armstrong's goal to turn the exchange into the "Amazon of assets." And just two weeks after adding crypto as an investment option, the online brokerage Public.com said it was making the shiba inu coin available to members.
Robinhood was once on the bleeding edge of crypto. It added dogecoin three years ago, and saw a huge payoff as dogecoin rose to become more than a third of its crypto revenue in the first quarter.
But it hasn't joined the shiba inu party. Part of the reason appears to be a reluctance to attract more heat from regulators who are already looking into allegations that Robinhood has turned investing into a game, and have also been critical of the crypto industry itself.
CEO Vlad Tenev told analysts on a recent earnings call that when it comes to adding new crypto tokens, "We're going to be very careful. We're a regulated entity, and we're hopeful to get some clarity soon on coins."
That has to be painful for a company that once seemed closely allied with groups like Reddit's WallStreetBets. Shiba inu coin rode the same defiant, counterculture wave that's been a key feature of the crypto revolution and propelled dogecoin's rise, said Park. "Once dogecoin became mainstream, it wasn't countercultural enough, so shiba came to take its place," he told Protocol.
The shiba inu army isn't quitting. A petition to Robinhood to add the shiba inu coin has received more than 470,000 signatures.
"There's a lot of consensus-driven pressure on Robinhood," Chris Kline, co-founder and chief operating officer of Bitcoin IRA, told Protocol. "I think you're going to see more adoption of the token itself on those platforms."
Proudman said shiba inu's momentum is "proof that, if a community gets behind a project or company in any market — traditional or digital — they can exert more influence over the asset's valuation than was previously possible."
But squid coin's collapse underscores the risks of jumping on a coin that's trending because it's trendy. In crypto "as with any good thing, there are bad players that try to mess it all up for their own gain," Park said.
Launched last month, squid coin rapidly rose in value, propelled by social media chatter. But on Monday, the token's value plunged from a high of about $2,860 to zero after the coin's creators, who are now known, cleaned out about $3.3 million in funds.
The purported scam is known as a "rug pull," in which "a developer [sells] off nearly all of the coins at once, capturing the total liquidity of the market at that time," Park said.
"The squid collapse is unfortunate, but also all too common in the altcoin world," he added. "The altcoin part of the crypto world is the Wild West."
Kline of Bitcoin IRA said "a token offered and limited to a mania-driven show like 'Squid Game' is full of red flags. Again, you need to arm yourself with proper education and research for making a decision when it comes to investing in crypto."
More coins are coming all the time, which means the shiba versus squid conundrum isn't going away. If the calculus for ordinary investors in crypto is complex, the tests businesses face in deciding when to add a coin are even more daunting.
