What some are calling the greatest trade of all time, this is likely the most profitable single cryptocurrency investment the market has ever seen.
This is the story of how one investor turned $8,000 into over 5.6 billion in just over 1 year.
This is calculated as a return on investment (ROI) of about 38,461,400%.
This story began in August 2020…
In mid-2020, an entrepreneurial cryptocurrency developer by the name of Ryoshi decided to leverage the success of DogeCoin (which itself was a satirical cryptocurrency) and used Dogecoin’s symbol as the name of the cryptocurrency — a Japanese breed of dog known as Shiba Inu.
The creator also dubbed itself the “Dogecoin Killer”.
A few days after the cryptocurrency was launched, an investor (assumed to be the developer) purchased $8,000 worth of Shiba and then for the next almost 9 months, held onto the token without making any transactions within the wallet.
During the bull market of 2021 at its peak, this $8,000 investment was valued at over $5.6 billion dollars.
Even today, Shiba Inu is ranked near the top 10 largest cryptocurrencies by market capitalization.
While this is likely the greatest single cryptocurrency investment of all time, for investors there are some lessons we can learn from this trade.
What can we learn from this infamous trade?
While this may be a once-in-a-lifetime investment and has certainly created life-changing wealth, there are some lessons we can learn from this single trade.
1. The Greatest ROI comes from the Low Cap Market
The extraordinary returns seen in Shibu Inu are in part due to the investor buying in very early on when the token effectively had no value.
The market capitalization of a cryptocurrency is determined by multiplying the circulating supply by the current market price. At the time this investment was made, the market capitalization of Shibu was near zero.
The type of investment where the market capitalization is very low and the potential for return is +100x is also known as low-cap gems.
While it is possible for larger-sized cryptocurrencies like Bitcoin to 2x or 5x over a period of years, it is very unlikely if not impossible for Bitcoin to +100x. This is the appeal of cryptocurrencies at lower market capitalization levels as these have the potential to +100x within a short space of time.
If you are looking for a life-changing investment, then it would be found within the lower market capitalization levels.
2. The Community has a massive impact on the project
The developer had identified a large community interested in dog-themed cryptocurrencies, as we had seen with the rapid success of DogeCoin.
The success of cryptocurrencies, especially when it comes to smaller-cap crypto is dependent largely on hype and the community supporting it.
Shibu Inu squarely positioned itself within this community, even boldly claiming that Shiba Inua was a “DogeCoin killer”. Since this time we have seen literally hundreds of other dog-themed cryptocurrencies try and replicate the success of Doge and Shiba.
The lesson learned here is when looking to invest in a cryptocurrency, especially a lower market cap one, it’s necessary to look at the community supporting and backing the project. If you would like to know more about evaluating a cryptocurrency, including its audience, check out our article: 7-steps to evaluating a cryptocurrency.
3. Leveraging Market Cycles for the Greatest Return
An often overlooked component of the success of Shiba Inu was the timing. When this token was purchased it was during the run-up to the 2021 bull market when cryptocurrencies saw some of their highest prices.
This is a time when greed is at its highest and fear is at its lowest within the market. Many investors, seeing the meteoric rise in the price, didn’t want to miss out (Crypto FOMO), further propelling the price.
The lesson here is knowing where the market is within its cycle. There are four distinct cycles within the cryptocurrency market, and this purchase of Shibu Inu was made during the accumulation phase of the market cycle.
The biggest lesson from this example is to buy in early. As we all know the goal is to buy low and sell high. While there are many different methods and systems when it comes to investing, especially in cryptocurrency this trade has shown us one well-placed trade held over a period of time may very well be the best strategy for low-risk life-changing wealth.
What made this trade so profitable is the investor bought in very early (he was the first investor), made the purchase during the beginning of the bull run (knowing which phase the crypto market is in is key), and of course a little luck.
Learn to Profitably Invest in Low-Cap Gems
Some of the best returns ever seen within the cryptocurrency market have come from low-cap gems. In the beginning, there was only Bitcoin and if you purchased it when it was only a few dollars, this could have been considered a low-cap gem. While the opportunity to purchase Bitcoin for only a few dollars no longer exists, there is a thriving cryptocurrency market of over 10,000 actively traded cryptocurrencies - some of these are diamonds in the rough, also known as low-cap gems.
Follow us as we explore the cryptocurrency market in search of the next low-cap gem.
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