TL;DR: Dogecoin has become one of the most important cryptocurrencies right now thanks to Elon Musk, however its volatility is too high and that makes Dogecoin a dangerous investment. Here, I propose much safer alternatives with a more sustained growth such as INXT. I also advise you on how to deal with this type of volatile cryptocurrency such as Dogecoin or Safemoon.
Happy Doge Day!
Being in the year 2021 means constantly hearing the terms “Vaccine”, “lockdown” and “Dogecoin”. Today, I am not going to talk about the Covid-19 vaccine since I am going to cover a much different topic: DOGE, the cryptocurrency everyone is talking about😉
Dogecoin was created in 2013 by Billy Markus. Billy was a developer that worked for IBM. When he realized of the bad reputation that Bitcoin was gaining at the time (being used as a form of transaction on the black market) he decided to create an alternative that had nothing to do with illegal activities. And what better way to do it than to create a cryptocurrency and put the face of the famous Doge meme on it?
Dogecoin is based on Litecoin and its mining is quite fast compared to Bitcoin. The amount of Dogecoins that can be mined is 100 billion compared to the 21 million that Bitcoin offers in total.
We cannot deny that the evolution of this crypto has been spectacular and the value of Dogecoin has gone from $0'004927 (January 1st, 2021) to $0'386633 (April 20th, 2021). But what is behind this evolution? As I always say, not all that glitters is gold.
WHAT EXPLAINS THE EVOLUTION OF DOGECOIN?
If we carry out an analysis of Dogecoin we see that there are three main factors that explain its evolution:
-Elon Musk: Elon Musk is a genius. A master at whatever he sets his mind to. And what he did with Doge was not an exception. First, he announced that he was temporarily absent from Twitter (which already generated a lot of commotion on Twitter) and came back two days later talking about one of his companies and posting a tweet where he wrote “Doge”. Immediately the crypto price skyrocketed. Elon has been tweeting about this crypto for months. At a glance, we can see the impact these tweets have on the price of Dogecoin and there is a strong correlation between the two of them. When Elon tweets about Dogecoin, the price of Dogecoin goes up a lot. Somehow, we can say Elon controls the price of Dogecoin. However, despite Elon’s strong support for Dogecoin, Tesla has accepted payment in Bitcoin but not in DOGE. Odd, isn’t it? Or is Elon Musk not so confident about the durability of this crypto?
But Elon is not the only celebrity who is holding Doge, and social media is full of celebrities “confessing” that they have bought Doge.
-Resurgence of altcoins: It is impossible to deny that altcoins are having their moment of glory since the beginning of 2021. When the price of Bitcoin has risen as much as it has, altcoins are much more attractive and appealing because of their low price, especially for starters. As a result, investment in altcoins has increased. This has been a factor that has led many more people to buy these alternative currencies. DOGE has also been able to benefit from this situation.
-Positive sentiment towards cryptocurrencies: The fact that the cryptocurrency market has been rising over the last year has undoubtedly been very positive as it has allowed many more people to know and learn about cryptocurrencies. It has also changed the perception of cryptocurrencies. More people now see cryptocurrencies as the money of the future.
All these factors that have benefited Dogecoin also make DOGE a cryptocurrency with very high volatility.
I am not saying you should not invest in it, but you have to know that this is not a cryptocurrency that has long term potential, it is a short term thing. If you decide to invest, always do so very carefully. Even the creator of Dogecoin himself, Billy Markus, has warned of the importance of doing a study of the crypto before entering and advises against entering simply because Elon Musk posts a tweet. What happens if one day Elon stops tweeting about Dogecoin? Or even worse… What if one day Elon uploads a negative tweet about Doge?
These types of cryptos are very volatile and very dangerous. In fact, we are now seeing how Safemoon is growing by leaps and bounds but this growth is not sustainable and according to the experts you have to be very careful.
As I said before, this doesn’t mean that you cannot invest in Dogecoin, but if you do so you better be continuously monitoring it and keeping an eye on Elon’s Tweets. As you already know, the most basic lesson in crypto is to have a diversified portfolio and that is what I recommend. Don’t focus on short-term cryptos but on those that will give you profitability also in the long term. That is why I recommend the crypto par excellence: Bitcoin. And also, some altcoins with an impressive potential that will gradually give you profits:
-INXT (Internxt): Internxt is a decentralized cloud storage and its token is having a very positive and sustained evolution. In addition, the fact that there is a working project behind allows this crypto to have many utilities.
And what about you, have you joined the DOGE fever? Do you make a previous study before investing in a crypto or do you let yourself be guided by fashions and feelings? Let me know, I’ll read you!