Cryptocurrencies are off to a rough start in 2025. The total value of all coins and tokens in circulation currently stands at $2.7 trillion, which is down about 20% for the year. Even the undisputed industry leader, Bitcoin, is down 11% year to date.

But the cryptocurrencies at the smaller end of the market are faring the worst right now, as risk-off sentiment grips investors on the back of simmering global trade tensions, pushing them into safe assets like cash. Meme token Shiba Inu (SHIB 0.53%), for instance, is down by a whopping 46% in 2025 already.

Shiba Inu is famous for delivering a staggering 45,278,000% gain in 2021, which could have turned a perfectly timed investment of just $3 into more than $1 million. It remains one of the best annual returns in the history of financial markets, but the meme token failed to build on that early success. Could this year’s dip be the ultimate buying opportunity ahead of another historic run, or should investors steer clear?

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Shiba Inu’s woes started long before 2025

Unfortunately, Shiba Inu’s incredible 2021 gain was driven entirely by speculation. The token has no legitimate use case out in the real world, so consumers and businesses have little reason to own it. In fact, according to cryptocurrency directory Cryptwerk, just 1,036 merchants worldwide accept it as payment for goods and services.

As a result, by mid-2022, demand from speculators evaporated and Shiba Inu had plunged by more than 90% from its peak. Developers tried to create new use cases to support its value, but to no avail. They started building a Shiba Inu-themed metaverse where users could spend their tokens to customize virtual plots of land, but it still hasn’t launched. They also created a Shiba Inu-themed digital card game to draw attention to the ecosystem, but the effect was minimal.

Developers even released a Layer-2 blockchain solution called Shibarium in 2022 to rectify some of the clunkiness and high costs associated with the legacy Ethereum network, upon which Shiba Inu was originally built. The goal was to make Shiba Inu more attractive as a payment mechanism to drive more adoption among consumers and businesses, but it doesn’t appear to have supported the token’s value at all.

Shiba Inu remained mostly dormant after its epic collapse in 2022, until Donald Trump’s victory in the U.S. presidential election last November lifted the entire crypto sector. As a result, Shiba Inu managed to end 2024 with a gain of 97%, although its year-end closing price of $0.000021 was still way below its record high of $0.000086 from 2021.

A pro-crypto U.S. government could drive upside

Trump vowed to make America “the crypto capital of the planet” and treat the industry with a lighter regulatory touch to pave the way for new use cases. Under his watch, the Securities and Exchange Commission (SEC) has already paused or withdrawn its active lawsuits against crypto exchanges like Binance and Coinbase.

With the industry facing less red tape, it’s possible that developers might come up with a new use case for Shiba Inu — perhaps one that hasn’t previously been considered — to drive demand for the token. That isn’t necessarily a reason to buy Shiba Inu now, but it’s something for investors to look out for over the next year or so.

Plus, the SEC is likely to approve exchange-traded funds (ETFs) for other cryptocurrencies besides the majors like Bitcoin and Ethereum. XRP (Ripple) is one candidate, but applications have also been submitted for Dogecoin ETFs. Dogecoin is another meme token, so if it receives approval, it could pave the way for a Shiba Inu application in the future.

ETFs let financial advisors and institutional investors buy cryptocurrencies in a safe, regulated manner, so they can increase the pool of potential buyers, thus leading to higher prices.

But investors might want to exercise caution

An ETF is only helpful if investors actually want to own the underlying asset. The steep downside in Shiba Inu this year, and since 2021 more broadly, suggests that investors tend to sell at every opportunity instead. That isn’t surprising given the sheer lack of a true use case, meaning there is nothing but demand from speculators supporting the meme token’s value.

One of the biggest barriers to another historic rally is Shiba Inu’s enormous supply. There are 589.5 trillion tokens in circulation, which is why it trades at such a small price of $0.0000118 per token right now. Simple math suggests that if it reached a more conventional price of $1 per token, Shiba Inu’s market capitalization would top $589 trillion. That would make it 196 times more valuable than Apple, which has the highest cap in the world.

In other words, reaching $1 is practically impossible in Shiba Inu’s current state. The community is banding together to burn tokens, which means to remove them from circulation forever, but eliminating enough to justify a price of $1 could take thousands of years.

Therefore, given all of Shiba Inu’s headwinds and the lack of potential upside in the future, I don’t think investors should use the year-to-date dip as a buying opportunity. They will probably be better off avoiding the meme token entirely.