Shiba Inu (SHIB -2.99%) is often regarded as a meme coin rather than a reliable blue-chip cryptocurrency like Bitcoin (BTC -2.14%) or Ether (ETH -2.34%). It was created as a parody of Dogecoin (CRYPTO: DOGE), which itself was a parody of Bitcoin.

However, a $100 investment in Shiba Inu at its earliest trading price in November 2020 would be worth a whopping $2.35 million today. That millionaire-making rally was driven by its early association with Dogecoin, its listings on Coinbase and Binance, Elon Musk's tweets about Shiba Inu dogs, and the broader buying frenzy in meme coins.

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That rally boosted Shiba Inu's market cap to $7.3 billion, but it's still tiny compared to Dogecoin, which is worth $32.6 billion. Shiba Inu's price has also declined more than 40% year to date as elevated interest rates chilled the meme coin market, its network activity declined, and its "whales" (big investors) made fewer purchases.

That pullback could drive Shiba Inu's investors to take some profits and buy more stable cryptocurrencies like Bitcoin, which has risen nearly 20% year to date. That would be a prudent move, but I think Shiba Inu might still be worth buying before 2026 for four simple reasons.

1. Shibarium's expansion

Shiba Inu is a token that was minted on Ethereum's blockchain. Ethereum is a proof of stake (PoS) blockchain that supports smart contracts -- which can be used to develop decentralized apps (dApps), non-fungible tokens (NFTs), and other crypto assets. PoS blockchains also enable tokens to be "staked" (or locked up for interest-like rewards).

Since Shiba Inu was minted on Ethereum, it doesn't have its own native Layer 1 (L1) blockchain. But in 2023, its developers launched Shibarium, a Layer 2 (L2) blockchain that offers lower gas fees and faster transactions than Ethereum's L1 blockchain. It accomplishes that by bundling together transactions on Ethereum's L1 blockchain, processing them "off-chain" on Shibarium's L2 network at higher speeds, and returning them to Ethereum.

Shibarium allows Shiba Inu to be valued by the growth of its developer ecosystem, but its slower-than-expected expansion weighed down its price over the past year. To draw more developers to Shibarium, Shiba Inu added new developer tools and resources, developer-sponsored gas fees, and a revamped staking model to its network this July. If those efforts spur the development of more Shibarium-based apps, Shiba Inu's price should stabilize.

2. The metaverse could support Shibarium's growth

Earlier this year, Shiba Inu's developers launched "SHIB: The Metaverse," which houses over 100,000 plots of virtual land and accepts Shiba Inu as its default currency. This project is still in the early stages, but it might spur the development of other metaverse experiences, draw more developers to Shibarium, and encourage the adoption of Shiba Inu as a virtual currency.

3. The whales could wake up

Shiba Inu's anonymous founder, Ryoshi, minted its entire supply of 1 quadrillion tokens prior to its launch. Today, it only has a circulating supply of 589.5 trillion tokens. It's a deflationary token because it can only be "burned" (removed from circulation) instead of minted.

If Shibarium's network activity warms up and Shiba Inu's price rises again, its whales could burn more tokens to reduce its circulating supply and drive its price even higher. Among those whales, the top 10 wallets control roughly 62% of Shiba Inu's circulating supply. The top 100 wallets hold about 77% of its total supply. If those big investors suddenly ramp up their purchases or burn trillions of tokens, its price could surge and draw in more investors.

4. Interest rates should decline

Lastly, lower interest rates should drive more investors back toward Shiba Inu and other meme coins. The Federal Reserve hasn't cut its rates this year, but most analysts expect at least one or two rate cuts as inflation cools. Once that happens, Shiba Inu -- which has more irons in the fire than many other meme coins -- could soar again.

Should you buy Shiba Inu today?

Shiba Inu is still a speculative investment compared to Bitcoin and Ether, and it isn't somewhere you should park your life savings. You need to keep your risk tolerance in mind, too. But if you want to take a chance on a volatile cryptocurrency that might deliver surprising gains over the next year, you should nibble on Shiba Inu today.