3 Reasons To Buy Dogecoin, And 1 Reason To Sell

Dogecoin could be an attractive opportunity – but it comes with one huge catch

Last Updated January 6th 2022
6 Min Read

Key Points

  • Dogecoin is being used to fund an upcoming lunar mission in 2022
  • Dogecoin’s adoption is on the rise, and protocol upgrades will make it more practical for payments
  • Investors have to be aware of its inflationary nature and how it could affect the long-term value
  • It’s risky crypto but with a huge upside potential

Dogecoin (DOGE) is the 12th largest cryptocurrency by market cap. It has been one of the best crypto performers in 2020/21. Between April 2020 and April 2021, Dogecoin gained by over 12,000%.

However, in May, it entered a correction and dropped to a low of $0.17 down from highs of $0.77. It has since rebounded but is still trading below $0.30. At current prices, it could prove to be a bargain for long-term investors who look past its weaknesses.

Here are 3 reasons to buy Dogecoin and one reason to sell it.

No. 1 Reason To Buy: The Upcoming Space Mission

When Dogecoin was trading at peak prices back in April last year, Elon Musk tweeted that he wanted to put a literal Dogecoin on the literal moon.

Turns out he was not joking, and there are plans to put Dogecoin on the moon. The mission is called Doge-1 and is fully funded in Dogecoin.

The key companies involved in the Doge-1 mission are SpaceX and Geometric Energy Corporation. According to Geometric Energy Corporation, Dogecoin will have a payload of a 40 kg cube satellite that will get lunar spatial intelligence from cameras and sensors that it will have on-board.

On its part, through its Commercial Sales Vice President, SpaceX, said that this mission aims to show the use cases of cryptocurrencies outside of earth. He added that this could help set the stage for interplanetary trade.

So why is the mission that is scheduled for Q1 of 2022 a reason to buy Dogecoin? Well, the hype it will create for Dogecoin will be unprecedented.

Pretty much all space-related events receive coverage by some of the largest media houses in the world. Space has gained even more spotlight as the US and China seem to be entering a new space race.

In essence, once the event goes live, there will be much talk about Dogecoin in all global media. Given how cryptocurrencies respond to media hype, this is the one reason that could take Dogecoin to levels it has never tested before.

By conservative estimates, even if it were to retest its all-time highs, anyone who gets in now would be sitting on good profits. If it tests prices above $1, then the profits would be even more magnified.

The optimistic outlook is based on how Dogecoin has performed in the recent past. In just about a year, Dogecoin went up by 10s of thousands of percentages on nothing but tweets alone. This means hype that is backed by substance could lead to gains that dwarf those of 2020/21.

In essence, this upcoming mission is a good enough reason to buy Dogecoin now, in anticipation of a potential value explosion this year.

Once D-Day approaches, the volatility that will hit this crypto could make it difficult to find a good entry point that can deliver above-average profits.

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Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

No. 2 Reason To Buy: Doge’s Adoption Is Growing

The unprecedented Dogecoin rally in 2020 and early 2021 brought with it several benefits for Dogecoin. One of them was an upsurge in the number of companies accepting Dogecoin for payments.

Of course, the most notable of them is the acceptance of Dogecoin as the crypto to fund the Doge-1 moon mission.

Besides the Doge-1 mission, a number of companies have recently announced that they would start accepting Dogecoin for payments.

One of the biggest ones is adoption by the Dallas Mavericks. Mark Cuban is one of the biggest fans of Dogecoin.  Therefore, it is not a wonder that in March, his team became the first basketball team to accept Dogecoin for ticket sales and in the sale of merchandise. The company stated that it would use Bitpay for this service. 

Other top companies that have since started accepting Dogecoin for payments include Kronos, Kessler Collection, BOTS Inc, Air Baltic, EasyDNS, Newegg, and Post Oak Motor Cars.

Besides these high-profile companies now accepting Dogecoin, this crypto has also been used for one-off but equally high-profile transactions. For instance, it was accepted as payment in selling high-end apartments in Portugal back in May last year.

Since there is a correlation between the hype around Dogecoin and its adoption, then it is safe to postulate that it could gain even more adoption in 2022.

That’s because the Doge-1 mission will put Dogecoin on the world map, and lots of companies will be looking to ride on this hype.

Since Dogecoin is a payments crypto, widespread adoption in this space will add to its intrinsic value by a huge margin. This could see it gain significantly in 2022 and beyond, making its current price a good entry for someone with a long-term view of this crypto.

Read Also: Pros and Cons of Investing in Dogecoin

No. 3 Reason To Buy: The Dogecoin Protocol Is Being Improved

The Dogecoin protocol had been neglected for years mainly because this crypto was perceived as a joke.

However, with the seriousness that Elon Musk brought to it, the developer team is back and working on upgrades.

The upgrades they are working on are meant to make Dogecoin more scalable and also more affordable for everyday transactions. Elon Musk has proposed an increase to the block size, and the developer team agreed with him.

Given that Dogecoin is primarily a payments crypto, any upgrades that make it better on this front are a plus. That’s because the better it is for payments, the more people will be willing to use it.

By extension, this will add to its intrinsic value, which is good for its long-term value growth. It’s a good enough reason to bet on this crypto in the long run.

One Reason To Sell: Dogecoin Is Inflationary

The tokenomics of Dogecoin are so that it may not be worth it as a long-term investment.

That’s because it is inflationary, and 5 billion new Dogecoin’s enter circulation every year. In the long run, this could hinder Dogecoin’s potential to grow in value regardless of the adoption.

Due to its inflationary nature, holding Dogecoin long-term is the same as HODLing fiat currency. The only difference is that Dogecoin’s inflation is known and hardcoded in the protocol. Whereas for fiat, it is arbitrary and determined by a few people at the Central Bank.

Here’s The Bottom Line

Dogecoin is a cryptocurrency that offers investors lots of opportunities for value growth. That said, it carries its risks. There is a possibility that it underperforms deflationary cryptocurrencies like Bitcoin and Ethereum in the long run.

However, due to a series of good news coming in the next few months, there is a good potential of Dogecoin making investors extremely wealthy in the foreseeable future.

This potential makes it an exciting cryptocurrency for those who are bold to buy and hold it.

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Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

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