Dogecoin is an intriguing story on its own. It was created as a meme coin with no serious intention, back in 2013.
Both the name and the renowned Shiba Inu logo are based on the meme.
Dogecoin differs from Bitcoin in the fact that it is infinite in number – 10,000 coins are mined every minute and more than 5 billion coins every year.
For most of its existence, Dogecoin was not very well known.
However, from April 2021 it underwent a rally that made it among the top ten biggest cryptocurrencies by trading volume. Although each Dogecoin is just worth pennies, the overall value topped $50 billion?
Will Dogecoin Crash Again?
According to cryptocurrency experts,
Dogecoin is expected to crash badly because until now, it has been lifted only by the general online trend (which will eventually subside) and the support of Elon Musk.
There is no real-world usage for Dogecoin and the competitive edge for it to be used over other more developed coins is missing.
Another matter of concern that discourages new users is that the transaction fees for Dogecoin are incredibly high.
It is higher than most popular cryptocurrencies. To add to this, the blockchain network of Dogecoin is much slower in transactions and this can hardly be scaled up to cater to larger numbers of transactions.
To put this into numbers, data suggests that the average number of transactions in Bitcoin was less than 20,000 a day in September 2021.
Visa, one of the most popular credit and debit card makers, processes 20,000 transactions a second.
There are less than 2000 merchants worldwide who accept Dogecoin and that is less considering the coin has been in existence for 8 years.
Is This The Time To Invest In Dogecoin?
At the time of writing, cryptocurrencies are on the downslide. There is a constant debate of whether now is the right time to buy them.
Specifically in the case of Dogecoin though, the need to invest and the risks go beyond the general price fluctuations in the market.
Also Read: Can Dogecoin Reach $10000?
Here Are Some Tips For Buying Dogecoin
1. Do Your Research
With any form of investment, you should always do your research. It is better to be as informed as possible about the financial instrument you want to put money on.
Cryptocurrencies like Dogecoin are so volatile that it is common to take impulsive decisions. But be careful!
If you want to put money on Dogecoin, do not do it just for the trend.
Honestly, the trend makes no long-term difference in terms of the returns you get. Learn about the fundamentals of Dogecoin and the team backing it.
By viewing the graphs of previous trends of Dogecoin, you can take an estimate of how far it will go in the future in terms of price.
Just know that Dogecoin is among the top cryptocurrencies in the world in terms of market cap but there is no real motive behind it.
It is also facing stiff competition for newer and more efficient coins.
2. Know The Current Status Of Dogecoin And Trends Behind It
To estimate how a financial instrument will perform, you do not need to always go to an experienced advisor.
It just takes some common sense. In the case of cryptocurrency, it needs to be of some use in the real world, must have lesser transaction fees, and have a competitive advantage over other coins.
Some proponents of Dogecoin call it the future coin for spending on everyday transactions.
But in reality, the coin is inflated so much that it will never have the value to spend on transactions. Even Bitcoin has more merchants accepting it than Dogecoin.
Energy efficiency is also not with Dogecoin. Ethereum is launching Ethereum 2.0 which is speculated to use 99.95% less energy than the current network.
It is already the second most popular cryptocurrency behind Bitcoin and this could give it an even upper hand.
3. Read Future Speculations For Dogecoin
The price surge of Dogecoin till now is only because of temporary pushes by celebrities or influencers.
Some celebrities such as Mark Cuban and Elon Musk have talked about Dogecoin on social media and that has sent the price of Dogecoin to the moon for some time.
This kind of growth is unhealthy according to cryptocurrency experts and it won’t continue the upward trajectory for a long period of time too.
Also Read: Why Dogecoin Has No Cap?
Dogecoin Price Plummet 2022 – Why Did It Happen?
The first month of 2022 saw one of the biggest falls of cryptocurrencies and even fiat currencies as well.
Due to the crash, almost $1 trillion is getting wiped off from the cryptocurrency market. This crash shook even those investors who have been around space for a long time.
According to some cryptocurrency experts, the crypto crash is attributed to the fact that there is so much regulatory uncertainty.
Countries have been putting increasing restrictions on crypto tokens, NFTs, and stable coins. Another reason is that the splurge in DeFi apps has made cryptocurrency exchanges even more volatile.
According to the events from January mid-2022, the US Federal Reserve increased the possibility of boosting its interest rates from March 2022 itself and about its plans to withdraw stimulus from the market.
It’s going to take some time for the cryptocurrencies to come back to pre-crash levels, but it pushes the need for more regulatory support and institutional investment to stabilize cryptocurrencies.
Conclusion
If you are looking for serious trading and investment, Dogecoin may not be the right option for you.
Check generally about how the cryptocurrency market is behaving, as drops in Bitcoin and Ethereum value tend to send ripples affecting prices of other cryptocurrencies as well.
Be mindful of all the risks involved and only invest that amount that you would not mind losing even in the event of the worst crash.
