The Bias That Propels Shiba Inu and Dogecoin
  Insights, news and analysis for the professional investor By Marc Hochstein, Executive Editor October 31, 2021 Sponsored by  Prices as of 10/31/21 @ 11:00 p.m. UTC If you were forwarded this newsletter and would like to receive it, sign up here.
As ridiculous as the Shiba Inu craze is, CoinDesk's coverage has been thorough and sharp. Reporter Muyao Shen in particular has been on this story like gravy to potatoes, starting with her mid-October explainer of SHIB's resilience, all the way to last week's data-driven analysis of the asset briefly overtaking that other dog coin.
Meanwhile, CoinDesk TV's Christine Lee and Lawrence Lewitinn explored the popularity of SHIB on the Indian rupee market in an interview with the CEO of WasirX, who sounded as befuddled about this coin as I am ("So far I've been ignoring [SHIB] but now I'm getting more interested in trying to understand how this all works.").
In this week's Briefing column below, Lawrence takes a wide-lens, almost zen view of the phenomenon, suggesting that this silliness may serve a greater purpose.
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The Briefing Bitcoin may be the alpha dog of crypto, but for many small retail investors these days, dogecoin and shiba inu are the pick of the litter.
Binance subsidiary WazirX, India's largest cryptocurrency exchange, suffered outages as traders jumped into the fray, buying shiba inu and stressing out the platform's servers to the point that trade executions were delayed this past Wednesday. Over half a billion dollars' worth of trades were done on WazirX that day, the highest of any crypto exchange in India, CEO Nischal Shetty tweeted.
"It basically brought down our exchange," Siddharth Menon, one of WazirX's co-founders and its chief operating officer, said on CoinDesk TV's "First Mover" program Thursday morning. "The kind of active numbers and the active users that we saw in the last 48 hours has actually shocked us. We were not ready for it. We were all ready for the bitcoin move, but we were never ready for shiba inu."
Menon suspects that there is some amount of unit bias at play. That's where a novice trader is prone to buy a lot of one kind of cryptocurrency because the price of one unit of it is relatively small compared with, say, bitcoin even though one can buy the same dollar amount in bitcoin as the low-priced coin.
For investors who are dipping their toes in the water with a relatively small amount of money, a low-priced coin can make one feel a little richer. For example, as of this writing, $620 buys 0.01 BTC. On the other hand, it buys about 10 million SHIB.
What the data show
And while some "smart money" is starting to appear to be trading shiba inu and dogecoin, "whales," or large investors, remain in the more familiar seas of bitcoin and ether.
That can be seen in average trading volume.
 Bitcoin and ether average trade sizes are larger than those of dogecoin and shiba inu on almost every exchange. On Coinbase, bitcoin's average trade size is hovering at around $2,000, while ether trades average $1,600. On the other hand, the exchange sees average trades for dogecoin and shiba inu of roughly $800.
"This suggests price action is mostly retail-driven," said Clara Medalie, strategic initiatives and research lead at digital asset data provider Kaiko, adding that on Binance, the average trade for bitcoin and ether is about $2,000. That figure is $1,200 for dogecoin and $900 for shibu inu.
"While average trade size isn't a perfect gauge for institutional investment – most large traders break apart their orders into smaller sizes – we can still observe clear trends that correspond with waves of interest," she said.
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