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1 Reason to Invest in Shiba Inu, and 2 Reasons Not To

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Sheba is not (Crypto: SHIB) Is the last crypto currency to take the investment world by storm. Its price has soared by a phenomenal 86,489,545% in the last year, and it has risen almost 100% in the last 30 days alone.

These types of returns can make Shiba Inu a tempting investment. But there is more to cryptocurrencies than just its price, and there are a few factors to consider before you buy. While there is one good reason to consider purchasing Shiba Inu, there are two reasons you might want to move on.

Image Source: Getty Images.

Why consider investing in Shiba Inu?

1. You have some extra cash and you are ready to take a gamble

While all cryptocurrencies are volatile, Shiba Inu is an extremely high-risk type of investment with a high return. Its price has skyrocketed in recent weeks, and there is a chance it will drop at the same rate.

However, no one knows exactly when or if its price will collapse. At the rate that its price is rising, if you invest now, you may make some money before the inevitable fall. If you have free money and you are willing to risk it to earn some short-term profit, you can choose to invest in Shiba Inu.

Keep in mind that Shiba Inu remains an incredibly risky investment, so it’s wise to think of it as an experiment rather than a safe money producer. Do not invest more than you can afford, because there is a good chance you will lose money. But if you are willing to take that risk, there is no harm in putting a little cash into this investment.

Why might it be better to invest elsewhere

1. Its foundations do not reconcile with its explosive growth

Although Shiba Inu has recently gained astronomical returns, these gains are more related to the hype surrounding the cryptocurrency rather than its basic fundamentals.

The main reason for Shiba Inu’s price increase is its large community of followers. These investors bought the cryptocurrency en masse, raising its price. The more people invest, the higher its price climbs, and the more money these investors can make. However, eventually, these investors will sell their tokens to make money from their profits, and the price will plummet.

Since Shiba Inu does not have much benefit in the real world right now, she will probably have a hard time keeping up with the water after her followers sell their tokens and move on to another investment. It is very likely that its price will eventually collapse, and once that happens, it may not be able to go back.

2. This is a short-term investment, and market timing is risky

Short-term investments like Shiba Inu have the potential to make a lot of money for weeks or months, but once they crash, they usually collapse strongly. To make money with this type of investment, then, you will have to buy before the price goes up, and then sell a moment before it goes down.

While this may sound simple in theory, it is virtually impossible in practice. No one knows how long Shiba Inu’s run will last, and if it starts to crash, its kit may drop within a few days. If you wait just a day or two too many to sell, you may lose a lot of money.

A much safer way to make money is to buy healthy investments and hold on to them for the long term. This strategy may be a lot less exciting than buying short-term investments like Shiba Inu, but it is much safer and has a higher chance of making money over time.

Shiba Inu may be a new and exciting cryptocurrency, but it can be dangerous. If you choose to invest, make sure you are fully aware of what you are getting into. However, for most investors, there are better (and safer) options out there that can help you make more money with significantly less risk.

This article represents the opinion of the author, who may not be in agreement with the “official” recommendation of Motley Fool’s premium consulting service. We are colorful! Investigating an investment thesis – even one of our own – helps us all think critically about investments and make decisions that help us be smarter, happier and richer.

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