- Shiba Inu, like other risky assets, is facing bond yield risks.
- There is also a possibility that Shibarium will not be as successful as expected.
Shiba Inu price has moved sideways in the past few weeks as investors wait for the upcoming Shibarium launch. This wavering also happened amid the rising concern about the crypto and stock industry as short-term bond yields jump. SHIB was trading at $0.000012, which was a few points below this week’s high of $0.000015.
Bond yields risks
Shiba Inu price faces two main risks. First, there is the rising risk about the bond market in the US and other developed countries. Market data shows that yields of the 2-year government bonds is slowly approaching 5%, the highest level in many years.
Higher bond yields has seen investors start moving from the relatively safe government bonds. That’s because any funds held to maturity in the next 2 years will have a yield of about 5%. In the same period, inflation will likely be below 3%, leaving a return of about 2%. While a 2% return seems negligible, it is substantial for institutional investors.
Short-term yields have jumped as investors anticipate that the Federal Reserve will be more hawkish in the coming months. Data published recently showed that inflation remained above 5% in January, higher than the Fed target of 2%. The unemployment rate has plunged to a 53-low of 3.4%.
Shiba Inu price faces the risk that investors will abandon cryptocurrencies and move their funds to safer assets like bonds and even the US dollar. The US dollar index has jumped to $105 and analysts caution that it could retest its 2022 highs.
Read more: How to buy Shiba Inu.
Shibarium news risks
The other major risk that could affect Shiba Inu price is the upcoming Shibarium launch. The latest Shibarium news was the launch of a website to onboard key players in the ecosystem like validators and developers. The statement said:
“It’ll allow us to meet the army and remain organized in the process. It’ll allow us to grow Shibarium’s reach with professional companies and allow us to reset our relationships with businesses that we’ve connected to in the past.”
However, I believe that Shibarium presents a major risk for SHIB in that it might not be as successful as what analysts expect. That’s because the layer-2 industry has become extremely crowded in the past few months.
Some of the top layer-2 networks that are seeking to grow market share are Arbitrum, Polygon, Optimism, and Loopring. Just recently, as I wrote on Monday, BitDAO announced that it had launched Mantle, a new layer-2 network.
Therefore, while Shibarium will power the Shiba Inu ecosystem, I fear that the network will not be as successful as analysts expect.
On a positive note, we see that the Shiba Inu price has formed what looks like a cup and handle pattern, which is usually a bullish sign. The recent decline seems like the handle section. Therefore, we could see SHIB price stage a comeback ahead of the Shibarium launch and then erase them with time.
