There is no doubt that cryptocurrency is one of the hottest topics of discussion and debate right now. Whether you’re watching the TV, listening to the radio or having dinner with friends, the topic of crypto millionaires and the volatile price of some of the popular coins such as Bitcoin does come up! However, one coin that has divided the opinion of crypto trading like never has been Dogecoin (DOGE). Started as a joke and often referred to as a “meme coin”, DOGE has been one of the biggest gainers, making many risky traders millionaires overnight!
A Brief History of Dogecoin (DOGE)
The tremendous rise of cryptocurrencies such as Bitcoin pushed software engineers Jackson Palmer and Billy Markus to create Dogecoin as a joke in 2013. The dog in the symbol is a meme, and thus the coin also became famous as a “meme coin”, which was valued at just a penny when it came out. As the popularity increased, industry influencers such as Tesla founder Elon Musk and small-time day traders started jumping on the DOGE bandwagon, and soon the price started shooting up.
2021 saw DOGE reach an all-time high of $0.74, and despite the satirical beginning of the coin, today, people are trading and investing in Dogecoin to earn real money. As of June 9, 2021, DOGE is valued at $0.32 and has dropped close to 50 per cent from the recent all-time highs. So, should you invest in Dogecoin going forward? First, let’s look at some of the indicators that may help you make the right investment decision!
Reasons why Dogecoin is a Good Investment in 2021
Everyone knows that the entire cryptocurrency market is highly volatile, and prices of coins can go up or down more than 100% even in a single day. So while there is an actual value in trading currencies such as Bitcoin, Ether, Polygon, etc., these coins are safer than a meme coin such as Doge!
1. Dogecoin has maintained its value – $1000 invested a year ago would be worth approximately $128,993 today! Despite the crypto market crash in May, which saw more than $1 billion being wiped off from the market in just one day, DOGE has reasonably maintained its value. If the coin were still just a joke, then it would have crashed to levels of $.10 or lower. However, DOGE has maintained the value and has been consolidating in the price range of $0.30 to $0.45, trying to break out from the resistance level, just like any other cryptocurrency would.
2. Fast acceptance by the crypto industry – One of the main reasons trading or investing in Dogecoin was considered riskier than other currencies such as XRP, BTC, or ETH because many traders in the crypto world refused to accept it as a fair coin. However, the hype created by people such as Elon Musk and the trust shown by day traders has somewhat widened the acceptance of DOGE worldwide. Today, Dogecoin is being used as a legitimate mode of payment with big franchises such as NBA team Dallas Mavericks letting fans buy tickets and merchandise in exchange for DOGE.
3. Strong Technicals – The impact of any crypto coin is only as good as the conviction people show in the technicals of the coin. Before the DOGE hype, the coin was highly volatile, showing how investors were pumping and dumping the coin to manipulate the price. Fortunately, today one can spot common technicals such as support, resistance and many investors are bullish about the coin’s future. These are reasonably positive indicators that the future of Dogecoin is bright, and the coin is here to stay!
Reasons why Dogecoin is a Bad Investment in 2021
Despite some of the advantages mentioned above, there are some glaring red flags in the concept of dogecoin, which can make investors turn away from the cryptocurrency. Of course, some of the below-mentioned reasons may not apply to day traders, but if you are looking at DOGE from an investment view, then these reasons should be understood thoroughly before investing your life savings in the meme coin.
1. Lack of Utility – One of the most significant differences between a coin like Ethereum and Dogecoin is that ETH has practical usability attached to the token. Since Dogecoin was created as a joke, there is no straightforward utility, and thus, DOGE is often considered a currency with no actual use.
2. Unlimited Supply – The value of any asset increases only when the demand is high and the supply is limited. Bitcoin has seen a tremendous rise in value because the supply has already been capped, and there will only be little coins left for people to buy. However, one of the glaring disadvantages of Dogecoin is that the supply is unlimited, and thus the value of each coin a person holds will keep on decreasing. 3. Easily Manipulated – The last but certainly not the least important reason to not invest in Dogecoin is that investors can easily manipulate the coin with significant capital. For example, you may have already read news stories about how one tweet from Elon Musk triggered a rise or fall by more than 50% on a single day. This is a dangerous aspect and often the main reason why investors run in the opposite direction.