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2023 got off to a rocky start, with a rising market but a lot of uncertainty in the air about future economic and market conditions.

Crypto started to poke its head out with the price of Bitcoin (BTC 0.23%) is bouncing back nicely and recently broke above $21,000 in hopes of calming inflation and weakening the dollar. While I don’t know what the future holds this year, if inflation continues to cool and the Federal Reserve stops raising interest rates, there is a chance for a more bullish year for the broader crypto market.

In a bull market and more in a risky environment, I see the potential for the popular meme token shiba inus (SHIB -1.73%) to beat Bitcoin in 2023. Here’s why.

A more volatile token

Bitcoin is the pioneer of cryptocurrencies and blockchain technology, which is a big part of why it has become the largest and most trusted cryptocurrency in the world. Altcoins like Shiba Inu tend to move with a high correlation to Bitcoin.

But as people and institutions around the world embraced bitcoin and it became more entrenched in the mainstream financial system, the price of bitcoin became more stable than the altcoin market, not what you would call necessarily stable Bitcoin in the grand scheme of things. .

Bitcoin price chart.

bitcoin price given by Y-Charts.

Although things can always change quickly in crypto, since the pandemic, when the Bitcoin price drops, I expect altcoins to drop more and have more downsides. But on the other hand, when Bitcoin rises, I would expect altcoins to swing higher, making volatility both a plus and a minus for many altcoins.

Arguably the most viral cryptocurrency

Few altcoins have been more volatile or created more buzz than the Shiba Inu meme token, which now has a market capitalization of over $6.5 billion.

Shiba Inu rose to prominence as a joke on Dogecoin (DOGE -1.81%), which sparked the meme token craze. Even in 2022, when the crypto market fell into a crypto winter, Binance, the world’s largest crypto exchange, reported that Shiba Inu was one of the top three most watched major cryptocurrencies in 2022, with Bitcoin and Ethereum (ETH -1.22%).

And that buzz has carried over into 2023, with Shiba Inu ranking #1 on CoinMarketCap’s trending list as recently as January 9th, so there’s really nothing better than going viral and… generate buzz than Shiba Inu.

Cryptocurrency also has interest generated due to its soon-to-be-launched Shibarium Layer 2 protocol, which “provides the benefits of scalability, faster transaction times, lower fees, and an expansive development framework” for the Shiba Inu ecosystem. This is the first time the developers have tried to really improve the technical abilities of Shiba Inu, so it will be interesting to see how it goes.

How Shiba Inu wins in 2023

I will clarify here that I still much prefer owning Bitcoin over Shiba Inu. I also think Bitcoin’s added stability is further proof of its growing acceptance and long-term viability.

But I could see Shiba Inu outperforming Bitcoin this year under the right conditions. We will really need more favorable buying conditions and a more risky environment. This means more signs of slowing inflation and the Fed is ending its rate hike campaign and may also cut rates later this year.

I also think investors need to regain some confidence in the industry, especially after the FTX bankruptcy and the contagion it has spread. But if crypto escape the crypto winter and embark on a bull run, I would expect Shiba Inu to outperform Bitcoin due to its higher volatility and virality.

Bram Berkowitz has positions in Bitcoin and Ethereum. The Motley Fool has positions and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

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