Some investors have many money in cryptocurrencies. They are sometimes called “whales” to reflect the scale of their positions. And we’re not talking about $100,000 in any given cryptocurrency – whales own millions, if not billions of dollars worth of digital tokens.
As you’d expect, the largest cryptocurrencies based on market capitalization — Bitcoin and Ethereum (CRYPTO:ETH) — tend to particularly attract whales. But they don’t always limit their investments to just one cryptocurrency.
Ethereum whales really seem to like it shiba inus (CRYPTO:SHIB) these days. Right now, they own over $1.3 billion of the same coin, according to WhaleStats, a website that tracks the top 1,000 Ether wallets.
Why do Ethereum whales bet so much on Shiba Inu? Here are probably the best explanations.
Count on catalysts
Clearly, Ethereum whales expect the price of Shiba Inu to rise. Otherwise, they would be crazy to invest so much in digital currency. But with Shiba Inu falling more than 25% in recent weeks, Ethereum whales must rely on some catalysts to trigger a rebound.
One of the reasons Shiba Inu and other cryptocurrencies have fallen is because investors are worried about the possibility of a full-scale Russian invasion of Ukraine. Some Ethereum whales might expect Russian-Ukrainian tensions to ease quickly.
Another potential catalyst Ethereum whales could bet on is the planned launch of the Shibarium layer-2 solution. This project will significantly reduce transaction costs for Shiba Inu.
Additionally, the metaverse Shiba Inu opportunity has generated a lot of buzz. Although the cryptocurrency does not take advantage of this opportunity immediately, it is possible that the excitement as progress is made in the transition could increase the price of the same coin.
An old but a goodie
There is also a possible reason for the Ethereum whale interest in Shiba Inu which is an oldie but a goodie – diversification. Super-rich investors aren’t the only ones who understand the importance of diversifying their holdings.
Shiba Inu is one of many cryptocurrencies in which Ethereum whales hold prominent positions, according to WhaleStat. These whales have invested nearly $1.4 billion in FTX (CRYPTO:FTT)the native token of the FTX crypto-trading platform.
USD coin (CRYPTO:USDC) is another favorite of Ethereum whales. They have invested nearly $920 million in the stablecoin, based on data from WhaleStat.
Of course, buying other cryptocurrencies only offers limited diversification. It is likely that Ethereum whales have a lot of money parked in other types of assets as well.
Swim in choppy waters
There’s a reason these Ethereum whales aren’t known as Shiba Inu whales. Although they placed a big bet on the meme coin, they still have a lot more money invested in Ether tokens.
Ethereum whales undoubtedly recognize that Ether has potential catalysts similar to those of Shiba Inu. A resolution to the Russian-Ukrainian crisis would likely benefit all cryptocurrencies. As Shiba Inu fans eagerly await the launch of Shibarium, Ethereum has a major update on the way that will also lower its transaction fees. And it could also win with the rise of the metaverse, with many of the major game coins built on its blockchain.
But investing in cryptocurrency comes with risks. This is especially the case with digital tokens which don’t have as much real-world utility as others. Whatever the merits of Shiba Inu, it does not compare to Ethereum in terms of real-world usefulness.
Ethereum whales are betting big on Shiba Inu. These bets could well pay off. However, the whales are undoubtedly swimming in choppy waters at the moment.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging 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 wealthier.