Elon Musk got this party rocking, which means it might not last all that long.
- A Sunday-evening tweet spurred trading.
- Long-term investors should hold out for news about increased adoption of the cryptocurrency.
Cryptocurrency Shiba Inu (CRYPTO:SHIB) soared on Sunday evening following a social-media shout-out from Tesla founder and CEO Elon Musk. As of noon EDT on Monday, tokens were up 9% over the previous 24 hours, according to CoinMarkCap.com. Trading volume was up a far more robust 200% over that same time period.
At 6:20 p.m. on Sunday evening, Musk posted a picture of what appeared to be a rabbit holding a rocket-ship emoji. Cryptocurrency traders took this is a signal. Roughly 10 minutes after Musk’s post, Shiba Inu tokens were trading 14% higher. As previously mentioned, trading volume surged, and approximately $3.8 billion in Shiba Inu has changed hands over the past 24 hours as of this writing.
Image source: Getty Images.
It appears Musk was aware of what his post did to move Shiba Inu tokens. Shortly after they started soaring, Musk posted his thoughts saying, “I’ve thought about and … I’m not sorry for party rocking.”
It’s possible for Shiba Inu to be a long-term winner in the cryptocurrency space. However, I believe long-term investors should tread cautiously, because tokens are soaring today due to a short-term consideration. Celebrities can sometimes move the market, whether it’s cryptocurrencies or stocks. And that sword cuts both ways — a celebrity suddenly withdrawing support can cause prices to drop in the short term.
With stocks, analysts can also move the price per share with upgrades and downgrades. However, over time, stocks can overcome negative coverage by delivering positive business results. Likewise with cryptocurrencies — if a cryptocurrency sees its adoption increase (and not just its trading volume), it’s a strong candidate for delivering positive returns.
Today’s news for Shiba Inu isn’t about adoption. Therefore, I wouldn’t be surprised to see it give back some of its recent gains in coming days and weeks. For long-term investors, I’d suggest focusing on things more substantial, ignoring day-to-day noise like this.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Jon Quast has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.
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