Note: None of this is obviously financial advice, and the only reason I have to put this disclaimer up here is because we live in an impossibly stupid world.
For the uninitiated: a shitcoin is any cryptocurrency that isn’t Bitcoin or Ethereum.
I need to get this take in that’s been percolating in the back of my head before stubbornly high inflation and slowing GDP figures inevitably bring markets back down towards some semblance of reality and wipe this nonsense out of the news cycle with it.
One of my foundational promises to the Splinter audience is never to bore you with dumb crypto stuff, only to entertain you with it. I may fire off a take or two on a slow news day defending some aspects of it (like how the most widespread and effective thing crypto has ever created ironically is something always worth $1), but like I wrote before, it’s not interesting enough to write about regularly anyway.
HarryPotterObamaSonic10Inu however, is worth writing about. I have been paying attention to crypto since 2013, and this is some of the most unhinged activity I have ever seen. You thought shitcoins were out of control when Dogecoin put Elon Musk on Saturday Night Live?
That was simply the moment the shitcoin atom was split, and we were introduced to a new kind of hell with a quadrillion different Dogecoin variations, beginning with Shiba Inu (SHIB) in 2021. All of this garbage is making some crypto traders obscene amounts of money. If you bought $100 worth of SHIB at its all-time low, it would have netted you $152,850 if you sold at the all-time high.
To be clear to any folks who don’t want to listen to the disclaimer up top when I reveal even more preposterous shitcoin return figures below: we are speaking about the recent past here. After Bitcoin reached all-time highs last month, returns have turned negative. This garbage is not something you want to be holding on the way down.
There have still been strong shitcoin bounces on this stairway back down towards somewhere resembling whatever fair value means for this shit, especially when compared to the traditional finance world who benchmarks itself against “risk-free” government debt and ten percent average annual market returns, but it sure seems like most if not all of the juice has already been squeezed out of this rally.
If you had gambled $100 on the following one-hundred percent real shitcoins at inception and sold them at their peak, you would have profited about this much money from each one.
HarryPotterObamaSonic10Inu: $39,150
Floki Inu (a coin dedicated to Elon Musk’s dog): $319,800
dogwifhat: $310,500
PEPE: $19,200
Jeo Boden: $4,065
Elizabath Whoren: $2,475
Cumrocket: $20,150*
*This is its 2021 all-time high, all the others happened this year. Floki Inu’s figure technically isn’t its all-time high as it was a bit higher in 2021, but c’mon, look at that madness—you get the point.
From a returns standpoint, Bitcoin is just a triple-leveraged bet on the Nasdaq, and shitcoins are an even bigger levered bet on Bitcoin. All of them have demonstrated a high degree of sensitivity to inflation. Ever since the inflation print that changed the world in November 2021, markets have basically just been gambling on inflation figures.
And they’re not good! Any schmuck who has paid to learn about discounted cash flows can understand how this is bad news for the triangular tower of shitcoin gambling strapped to the back of a heavy-looking equity index which has a lot of its value rooted in projected future cash flows.
Shitcoins have no cash flows. They’re just shit. Bitcoin and Ethereum are decentralized cryptocurrencies people use (and Solana, but that’s mainly just to gamble on shitcoins) in an attempt to demonstrate use cases for a technology that has existed much longer than Satoshi Nakamoto’s version of it.
There is no value to the vast majority of shitcoins, no one uses them. That’s not even the point. The point is to say you bought a dogwifhat lottery ticket, and 2021 opened a portal to hell that Cumrocket was more than happy to blast through. By 2024, anyone really could create a shitcoin, and Solana became host to a party starring luminaries like Jeo Boden and Elizabath Whoren. The money people made off of this rally was obscene, and if you are one of those people still holding on to unrealized shitcoin gains, it would be a wise idea to look at the new economic data and really consider what kind of nonsense you’re sitting in.
It doesn’t matter if it’s a big Ethereum competitor like Solana or the most obscure meme coin on Solana, they’re all called shitcoins because we have multiple bear markets proving they all go to the same place once everyone gets a harsh dose of reality about what kind of “value” these things actually demonstrate. Also because, well, look at this shit. It’s unseemly even by crypto’s extremely low standards.