Bitcoin (CRYPTO: BTC) is the world's biggest cryptocurrency. Its market capitalization of $1.3 trillion accounts for more than half of the market cap of the entire crypto market, which currently stands at $2.4 trillion.

The crypto industry went through a challenging bear market in 2022 following the collapse of a number of high-profile projects and exchanges. However, Bitcoin is up 53% this year, and it's trading near a record high on the back of renewed positivity among investors.

That bullish sentiment appears to be spreading to all corners of the crypto market. Shiba Inu (CRYPTO: SHIB) is sitting on a year-to-date gain of 79%, so it's doing even better than Bitcoin at the moment. It isn't the first time this meme token has outperformed the industry leader, because it delivered one of the best gains in the history of financial markets in 2021.

However, here's why investors shouldn't expect Shiba Inu to outperform forever.

The financial industry is embracing Bitcoin, while shunning speculative tokens

Bitcoin is a decentralized cryptocurrency, which means it isn't controlled by any single person or government. Supply is capped at 21 million coins, and it operates on the blockchain, which is an autonomous, reliable system of record. Therefore, many crypto enthusiasts consider Bitcoin a viable alternative to traditional money, because supply can't be manipulated or "printed" to degrade its purchasing power.

However, adoption has been lackluster. Only 9,224 businesses worldwide accept Bitcoin as payment for goods and services, (according to Cryptwerk), and if people can't spend it at their favorite stores, they don't have much incentive to own it. Volatility might be one reason merchants are reluctant to enter the ecosystem -- any currency that can plunge in value by more than 50% in a single year (as Bitcoin did in 2022), with the potential to rise unpredictably by a similar amount, makes cash flow management a nightmare.

As a result, many investors prefer to look at Bitcoin as a store of value, sort of like a digital version of gold. That use case received further validation when the U.S. Securities and Exchange Commission started approving Bitcoin exchange-traded funds (ETFs) earlier this year. Dozens of them have hit the market, and they give investors a safe, regulated way to park money in Bitcoin.

ETFs are creating new demand for the cryptocurrency, which is probably a key reason it's trading near an all-time high. But the speculative end of the market hasn't been so fortunate. Although Shiba Inu is up more than Bitcoin in 2024, it's still down 78% from its all-time high, which was set during 2021.

Few avenues to new highs exist for Shiba Inu

Shiba Inu generated a return of 45,278,000% between Jan. 1, 2021 and Dec. 31, 2021, which could have turned a perfectly timed investment of $3 into over $1 million. Its spectacular collapse since then confirms that the incredible bull run was driven by rampant speculation rather than fundamentals.

As of this writing, just 989 merchants accept Shiba Inu as payment, so it's faring significantly worse than Bitcoin in terms of adoption. That's no surprise, since it's far more volatile. It isn't a very good store of value either, given its decline since 2021. So a Shiba Inu ETF probably wouldn't receive much demand, nor is one likely to get regulatory approval.

The developer community is trying to create new use cases for the token, but progress has been limited. In 2022, a Shiba Inu metaverse was in the works which promised to give enthusiasts a way to spend their tokens within the digital realm, but it still hasn't launched.

Developers did release Shibarium last year, which is a Layer-2 blockchain solution designed to make it cheaper and faster to transact with Shiba Inu tokens. The goal was to eliminate some of the clunkiness associated with the legacy Ethereum network upon which Shiba Inu is built, in the hope it would encourage more people to buy and spend tokens.

But Shibarium hasn't really boosted adoption, nor has it bolstered the price of Shiba Inu tokens. The bottom line is this: Without widespread adoption, it's going to be very hard for Shiba Inu to create (or maintain) value. Speculation isn't enough to generate long-term returns, as proven by the token's post-2021 performance.

Bitcoin is a safer bet than Shiba Inu, but investors have other options

Since ETFs have given financial advisors and institutional investors a legitimate avenue through which to buy Bitcoin, it's probably going to be a safer investment than Shiba Inu from now on. However, an element of speculation will always be responsible for the performance of every cryptocurrency. This asset class doesn't generate revenue or earnings, so investors only buy into it in the hope that other investors are willing to pay higher prices in the future.

In my view, it's a much better idea to buy high-quality stocks instead. The benchmark S&P 500 (SNPINDEX: ^GSPC) is filled with them. The index has a stellar track record of delivering reliable returns since it was established in 1957, and there is an abundance of ETFs that make it easier than ever to track its performance.

While the S&P 500 will probably never soar by millions of percentage points in a single year like Shiba Inu did in 2021, it's also far less likely to plunge 70% or more. When we look back on this moment in 20 years, I think investors who invest in the broader stock market today will have done much better than those who bought Shiba Inu (and maybe even Bitcoin).

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

Bitcoin Is Up 53% This Year, But This Cryptocurrency Is Doing Even Better was originally published by The Motley Fool