Dogecoin (CRYPTO: DOGE) went via some wild swings over the previous three years. The cryptocurrency was launched in 2013 as a parody of Bitcoin (CRYPTO: BTC) named after the Shiba Inu canine meme. It was solely price $0.01 originally of 2021, however by Could 8 of that yr, it had soared to a report excessive of $0.73.
That rally was pushed by two foremost tailwinds. First, a mixture of social media buzz, low rates of interest, and stimulus checks sparked a shopping for frenzy in cryptocurrencies, meme shares, and different speculative investments in 2021. Second, celebrities like Elon Musk, Mark Cuban, and Snoop Dogg jumped on the bandwagon and promoted Dogecoin to their social media followers.
However right this moment, Dogecoin is just price about $0.16. Hovering rates of interest drove traders away from speculative investments like cryptocurrencies, and most of the market’s smaller altcoins collapsed as a brand new crypto winter started.
Confronted with these challenges, many traders may suppose it is smarter to stay with “blue chip” cryptocurrencies like Bitcoin and Ether. However, some traders consider that Dogecoin might nonetheless bounce again within the close to future.
Altcoin Sherpa, the alias for a carefully adopted crypto analyst with almost 217,000 followers on X, not too long ago claimed that purchasing Dogecoin and anticipating it to rally about 150% to $0.40 was one of many “most secure trades” traders might make proper now. Let’s have a look at if that outlook makes any sense — and if traders must be extra bullish on this risky meme coin.
What’s the bullish case for Dogecoin?
Altcoin Sherpa’s bullish case for Dogecoin is predicated on the idea that retail traders will purchase it once more, that it has nice liquidity and low draw back relative to different meme cash, and that it is extra interesting than most of the smaller altcoins.
He additionally believes that each one it takes will probably be one tweet from Elon Musk to “blow it up.” Prior to now, a number of of Musk’s tweets about Dogecoin — together with Tesla‘s acceptance of Dogecoin funds and a brief change of Twitter’s emblem right into a Shiba Inu final yr (previous to its rebranding as X) — all boosted the meme coin’s worth.
However Dogecoin nonetheless has fewer catalysts than different cryptocurrencies
Dogecoin may be extra steady than different smaller altcoins, but it surely additionally has fewer long-term catalysts than Bitcoin and Ether. It is now accepted as a fee technique at a number of companies, however its risky worth nonetheless makes it extra of a publicity stunt than a practical fee possibility for many clients.
The regulators additionally do not appear too impressed with Dogecoin. Final September, the New York State Division of Monetary Providers excluded Dogecoin from its “inexperienced listing” of eight regulated cryptocurrencies — which embody Bitcoin, Ether, and 6 stablecoins from PayPal and Gemini. That exclusion suggests it is nonetheless a extremely speculative funding.
Dogecoin’s blockchain platform additionally cannot be natively used to develop decentralized functions. That is as a result of it was initially forked from Bitcoin’s blockchain, which does not help the event of apps, and makes use of the identical energy-intensive proof of labor (PoW) technique to mine its tokens.
By comparability, Ethereum, Solana, and Cardano all use the extra energy-efficient proof of stake (PoS) technique, which has been extensively adopted for the event of decentralized apps and smaller tokens. Dogecoin’s backers subsequently launched Dogechain, a separate blockchain community to help Dogecoin-based apps, but it surely is not as extensively used as different decentralized platforms.
There’s additionally proof that traders are merely dropping curiosity in Musk’s views on Dogecoin. This April, he randomly tweeted about its rising reputation, however its worth barely budged. That waning curiosity counters Altcoin Sherpa’s opinion that “all it takes” to carry Dogecoin could be one other bullish tweet from Musk.
Traders must be skeptical of Dogecoin’s future
Dogecoin might need a brighter future than most of the market’s smaller altcoins, however I can not confidently say that it’ll soar 150% within the close to future. Rates of interest are nonetheless excessive, and the brand new Bitcoin ETFs and upcoming Ether ETFs might pull a whole lot of traders away from smaller altcoins and meme cash even because the crypto winter ends.
So as a substitute of following pseudonymous crypto analysts with a big social media viewers, traders ought to carry out their very own due diligence and perceive that Dogecoin might simply expertise a 50% decline in worth earlier than it doubles or triples on this difficult market.
Must you make investments $1,000 in Dogecoin proper now?
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Leo Sun has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Bitcoin, Cardano, Ethereum, PayPal, Solana, and Tesla. The Motley Idiot recommends the next choices: quick June 2024 $67.50 calls on PayPal. The Motley Idiot has a disclosure policy.
1 Top Cryptocurrency to Buy Before It Soars 150%, According to a Popular Analyst was initially revealed by The Motley Idiot
