Shiba Inu (SHIB -1.28%) is one of the most popular cryptocurrency tokens at the speculative end of the industry. In 2021 it delivered one of the greatest returns in financial market history; a perfectly timed investment of just $3 on Jan. 1 would have made you a millionaire by the end of that year.

But the crypto market collapsed in 2022, and despite an attempted recovery in 2023, the total value of all tokens in existence remains 50% below its all-time high of $2.8 trillion.

Shiba Inu, on the other hand, is little changed this year, and is still a whopping 91% below its best-ever level. But with sentiment toward the crypto market slowly improving, investors might be wondering if the meme-token can stage another historic run. Will 2024 be the year Shiba Inu rockets to $1? Let's explore the possibilities.

Cryptocurrency figureheads continue to fall

Last year was horrific for cryptocurrency investors. It featured a slate of high-profile collapses, which reached a crescendo when stablecoin TerraUSD de-pegged and wiped an estimated $60 billion of value off the face of the Earth. One of the world's largest crypto exchanges, FTX, imploded soon after, with its founder Sam Bankman-Fried now in prison on fraud charges.

While 2023 has been a little quieter, the founder and chief executive officer of Binance, Changpeng Zhao (otherwise known as CZ), was recently forced to step down by the U.S. Securities and Exchange Commission. Binance is currently the world's largest crypto exchange, and it was hit with a $4.3 billion fine for money laundering. CZ is barred from having any involvement in the business.

Investors used to flock to the cryptocurrency industry because it served as an alternative to the traditional monetary system, which does have flaws. But they have now learned the importance of operating within a regulated environment, because most of them will never recover their losses from failed crypto exchanges and projects.

In fact, despite Bankman-Fried's imprisonment after misappropriating the exchange's funds, FTX customers are still owed an estimated $8.7 billion, with just $7 billion recovered so far.

Speculative tokens like Shiba Inu have suffered the most

The world's largest cryptocurrency, Bitcoin (BTC -0.15%), has staged a recovery this year, with a gain of about 130%. As I noted above, Shiba Inu hasn't generated any significant gain in 2023.

Some cryptocurrency enthusiasts initially believed the technology would replace regular money, but to this day not even Bitcoin has garnered widespread adoption among consumers and businesses. Only 8,168 merchants around the world accept Bitcoin as payment for goods and services. Shiba Inu has just 791 merchants in its corner.

If people can't use cryptocurrency tokens to pay bills or go shopping, they have no reason to own them except as a speculative bet that someone will eventually come along and buy them for a higher price. For that reason, it makes sense that tokens like Shiba Inu -- which have even less utility than the leaders like Bitcoin -- would be struggling the most right now.

Shiba Inu might never reach

Shiba Inu does have a few positive catalysts in the pipeline. A few months ago it launched its new Ethereum Layer-2 blockchain called Shibarium, which is designed to reduce friction and slash the cost of transacting in Shiba Inu. Theoretically, this could make the tokens a more attractive option for use cases within the decentralized finance arena.

Plus developers had some success with a digital card game called Shiba Eternity in 2022, and they are expected to launch a Shiba-themed metaverse in the near future.

But Shiba Inu has a major supply problem. There are roughly 589 trillion tokens in circulation, which means even at its current price of $0.000008, they still have a combined value of $4.8 billion. Simple math dictates that if the price rose to $1 per token, Shiba Inu would be valued a whopping $589 trillion.

The largest company in the world right now (Apple) is valued at just $3 trillion, and the U.S. economy produced $25 trillion in gross domestic product (GDP) last year. Based on those facts alone, it's impossible to conceive a scenario where Shiba Inu ever reaches a $589 trillion valuation.

The token does have another path to $1. The Shiba Inu community is currently working on "burning" tokens, which removes them from supply forever. While that would result in an organic price increase, it won't necessarily yield any gain for investors.

Ultimately, not only does $1 per Shiba Inu token seem unlikely in 2024, but it might never happen.