- Dogecoin is yet to retest its all-time highs of May 2021.
- Tesla’s announcement that it will start accepting DOGE has boosted it.
- However, there are a few things about DOGE you need to consider before buying.
With Tesla Accepting Dogecoin Payments, Could DOGE Rally In Value?
Dogecoin (DOGE) is one of the fastest-growing cryptocurrency. The coin has seen its popularity increase significantly since 2020. Dogecoin had its best run in 2021 when it recorded gains of 12,000%. However, it has since corrected by a considerable margin, and Dogecoin is still far from its 2021 all-time high.
Some investors still strongly believe in Dogecoin’s potential as an investment. With Elon Musk affirming his support for this meme coin, there is a pathway to success for DOGE.
Besides, meme coins are still a hot topic in crypto investment cycles, and Dogecoin is one of the biggest meme coins.
Is Dogecoin going to make a comeback? If so, could investing right now make you richers? Below is a more in-depth analysis of Dogecoin.
Will Dogecoin Surge Again This year?
Dogecoin has one of the most robust communities in the cryptocurrency market. The community is also highly active in social media, a factor that has helped drive its growth as an investable asset. Even savvy investors like Mark Cuban note that Dogecoin’s strong community is an asset that could help propel Dogecoin higher not just in 2022 but in the longer-term future.
Dogecoin is also traded on the largest cryptocurrency exchanges, such as eToro, Coinbase, Binance, and Robinhood. This makes it easy for investors to trade the coin. To give you an idea of how big of deal exchanges are, consider the fact that Dogecoin recorded its most gains in 2021 after Robinhood restricted and then restarted Dogecoin transactions in January 2021. The massive trading volumes triggered a rally that saw DOGE test highs of $0.77 in May. As the cryptocurrency market turns bullish again, Dogecoin’s multiple exchange listings could play in its favor.
Dogecoin also has the backing of Elon Musk, and this in itself is a big deal. Since 2020, Elon Musk has been the biggest reason why Dogecoin has maintained all the hype. Musk continues to reaffirm his support for Dogecoin, as was evident in the move by Tesla to start accepting Dogecoin payments for some of its merchandise.
Mr. Musk also recently said that he was not going to be selling any of his cryptocurrency holdings, including Dogecoin. For all the power that Elon Musk holds in the cryptocurrency market, this is a reason to believe that Dogecoin can make you rich if you hold long enough.
Don't Miss: Dogecoin (DOGE) Price Prediction
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A Few Risks To Put Into Consideration
These new factors could make Dogecoin a tempting investment. But you need to keep in mind, there are still plenty of risks to face.
Considering how big of a deal Elon Musk is in the cryptocurrency market, his affiliation to DOGE is compelling to buy and hold. However, in the last few months, his tweets about Dogecoin have only triggered minor rallies that have been followed by dips. It’s an indicator that the Musk effect on Dogecoin could be waning and doesn't necessarily mean it will surge again.
Dogecoin is still a meme coin and has little utility in the market. Compared to a cryptocurrency like Ethereum, which has smart contract capabilities, this crypto is only reliant on more people buying the hype. That’s a huge risk, especially when looking to commit a sizable investment.
Then there is the issue of its supply. Dogecoin is inflationary in nature, and 5 billion Dogecoins are put into circulation every year. If you are to apply basic economics, this means the odds are against Dogecoin ever gaining much in value. That’s when compared to a deflationary cryptocurrency like, say, Bitcoin.
Is Dogecoin A Good Investment For You?
Though Dogecoin has its weaknesses, they do not make it a bad investment. However, there is a lot that Dogecoin needs to work on if it were to remain competitive. If you want to invest in Dogecoin, just know that it is a high-risk, high-return investment.
Put in what you can afford to lose even if things don’t work out in your favour. If you are risk-averse, you would better stick to stocks and other conventional assets.