Is It Better To Invest Or Trade Dogecoin

Last Updated November 4th 2021
12 Min Read

2021 has been an incredible year for cryptocurrencies, with spectacular returns for investors and crypto traders.

But, in June, the crypto market flopped over into a savage bear market, with most cryptos declining 50% or more. If you were trading Dogecoin and saw the bear run coming, you'd have made lots of money selling Dogecoin. But, if you'd invested in Dogecoin at higher prices, you'd be sitting on significant losses right now.

In 2013, Jackson Palmer and Billy Markus founded Dogecoin, an open-source digital currency for peer-to-peer transactions. Dogecoin is a fork of Luckycoin (now gone) which was a fork of Litecoin.

Dogecoin started as a joke, and the founders intended it to be "as ridiculous as possible." The Dogecoin logo is a goofy looking Japanese dog, a Shiba Inu.

It took a while for Dogecoin (DOGE) to gain momentum in the crypto market, but today it has a vast, supportive online community.  Dogecoin is the #10 listed cryptocurrency by market cap of 13,571 other coins listed on CoinMarketCap. Over the last month or so, Dogecoin has lost some market cap and dropped from the #8 position.

Today, Shiba Inu (SHIB) nudged DOGE off the #9 position.

From joke crypto, Dogecoin became a popular low-priced source for tipping social media content. If you participate in a community using Dogecoin, you can receive tips (DOGE tokens) for sharing quality content. Or you can get DOGE from a Dogecoin Faucet, a website that offers a small amount of free DOGE as an introduction so you can interact with the Dogecoin communities.

The Dogecoin Discord community has 23,884 members, but Reddit is the largest Dogecoin community, with 2.2 million members.

OK, so Dogecoin has a vast, loyal community but is Dogecoin a good long-term investment or is it better to trade Dogecoin?

This post is a guide for understanding what to look for when debating whether to invest or trade Dogecoin. We'll take a look at the Dogecoin chart and show you why we think, right now, it is better to invest in Dogecoin (DOGE).

Contents

 

What Makes Dogecoin Popular?

With any investment, it pays to look at who is supporting it.

Elon Musk, CEO of Tesla, is one of Dogecoin's most prominent fans. Earlier this year, Elon Musk tweeted that Dogecoin is his favourite coin and expressed interest in working with them. He said, "Working with Doge devs to improve system transaction efficiency. Potentially promising."

Recently. The dormant Dogecoin Foundation resurrected with a "renewed focus on supporting the Dogecoin ecosystem, community and promoting the future of the Dogecoin Blockchain."

On the board of advisors are Elon Musk and Ethereum founder Vitalik Buterin, Billy Markus, Dogecoin co-founder, Max Keller core developer, and Jared Birchall, the head of Musk's family office.

Vitalik Buterin is the blockchain and crypto advisor. Jared Birchall represents Elon Musk as a legal and financial advisor.

The first assignment for the board is to secure three-year funding for employing a small, dedicated team to work full time on Dogecoin. Currently, volunteers work on the Dogecoin ecosystem.

When Elon Musk made his favourable tweet, the price of Dogecoin shot up by 40%. The public associate Elon Musk with success, and Vitalik Buterin, too, as the founder of the #2 listed coin Ethereum (ETH), which is currently at all-time highs. When a public figure gets behind a project, it increases confidence in investors.

And Dogecoin had a spectacular year. According to CoinDesk data, the price of Dogecoin increased by 15,000% up to the high of June 2021, at $0.73.

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Is It Better To Invest Or Trade Dogecoin?

This section will look at the Dogecoin chart and see why it is better to invest in Dogecoin right now.

DOGE/USD daily chart September 2020-June 2021

Image: Daily chart for DOGE/USD September 2020 – June 2021

From the end of 2020 to June 2021, the rise of Dogecoin appeared unstoppable.

Looking left on the chart, notice the price flatlined for an extended period, before the rise. With a few price bumps, from 2019 to the end of 2020, Dogecoin was doing nothing, going nowhere and had little interest from crypto investors or traders.

Then, suddenly, from the first week of January 2021, the crypto market exploded, and Dogecoin finally made its entrance.

But it didn't last.

From mid-May, crypto prices plummeted by 50% or more in a matter of weeks.

DOGE/USD daily chart May-November 2021

Image: Daily chart for DOGE/USD May 2021 – November 2021

The chart image above shows that Dogecoin currently has no tradable price action. Successful crypto trading is dependent on price movement and, right now, there are better cryptos to trade than Dogecoin.

The DOGE/USD chart is impossible to read other than we know Dogecoin is in consolidation, even when a few top listed cryptos are hitting new highs.

Look back to 2019, when the chart looked similar, and we may wonder if this is the calm before the storm for Dogecoin.

Will the Dogecoin price take off again? Could Dogecoin hit $1 before the end of 2021? Crypto experts predict Dogecoin reaching $1 by the end of the year, and we know that rapid price movement in the crypto market is not unusual.

One thing we know for sure is there is no predictability in trading cryptocurrencies. Historically, crypto price action seems to be a boom or bust, and you're lucky if you're on the right side of a trade or investment.

Don't Miss: Dogecoin Price Predictions

Why Invest In Dogecoin?

If you have spare cash and are comfortable risking it, investing in Dogecoin could be a good idea.

Had you invested $1,000 in Dogecoin at the beginning of the year, you'd have $85k to withdraw, six months later, at the height of Dogecoin's meteoric rise.

But crypto investing is speculative, so if you invest in Dogecoin right now, it could be a bit of a gamble, which could end spectacularly well or not.

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Reasons To Not Invest In Dogecoin

The fundamentals for Dogecoin are not as strong as other cryptocurrencies, despite being in the top ten listed cryptos. There are 129 billion Dogecoins in circulation, unlike some cryptos with small caps, like Bitcoin at 21 million.

If we use the principles of supply and demand, there's an almost infinite supply of Dogecoins, so the demand is low.

Dogecoin is not yet widely adopted by merchants, which makes it much harder to achieve sustainable growth. And, the truth is, Dogecoin doesn't really have a competitive edge in the crypto market, which makes it more challenging to reach new heights of success.

Don't Miss: Pros and Cons of Investing in Dogecoin

Has The Dogecoin Bubble Burst?

Besides the community hype and celebrity endorsements, nothing is tangible to explain this year's epic Dogecoin price rises. Undoubtedly, what didn't help Dogecoin was Jackson Palmer's Twitter rant in July.

In a Twitter thread, Jackson Palmer decried those in power in the cryptocurrency space. He said it is "controlled by a powerful cartel of wealthy figures" who "have evolved to incorporate many of the same institutions tied to the existing centralized financial system they supposedly set out to replace."

Palmer also criticized crypto marketing and how it is shared. In another tweet, Palmer alleged that "the cryptocurrency industry leverages a network of shady business connections, bought influencers and pay-for-play media outlets to perpetuate a cult-like 'get rich quick' funnel designed to extract new money from the financially desperate and naive."

Admittedly, the founders didn't intend for Dogecoin to be taken seriously. Even so, following Palmer's public rant, the price of DOGE/USD dropped to $0.16, with only a brief rally in August.

If you're a potential Dogecoin investor, a crypto founder who doesn't support cryptocurrencies could be a bit of a red flag.

With continued support from new Dogecoin Foundation advisors Elon Musk and Vitalik Buterin, the Dogecoin price has remained reasonably stable for the last few months.

But stable prices aren't great for investing or trading Dogecoin.

If you plan to invest in Dogecoin right now, you could be buying at a reasonable price and potentially see healthy returns in 2022. Any investment is speculative, and trading is not possible until Dogecoin sees some price activity.

After buying DOGE, the next stage is to make sure it is safe from hackers. It's much easier to buy now than it used to be, as most crypto exchanges sell DOGE for trading or investing.

Setting Up The Dogecoin Wallet

It's essential to secure your Dogecoin and not leave it floating on the exchange vulnerable to hackers.

Visit the Dogecoin website and download the wallet to your computer or Smartphone.

Follow the 4-step process

  1. Choose your wallet – the secure wallet stores Dogecoin on your laptop, computer or Smartphone. To use Dogecoin, you have to sync with the blockchain. There is a choice of two wallets.
  2. MultiDoge – available for Windows, Mac or macOS, MultiDoge is a light wallet that syncs with the blockchain
  3. Dogecoin Core – available for Windows 32-bit or 64-bit, Mac 32-bit or 64-bit or macOS, Dogecoin Core is a full wallet that syncs by downloading and providing a complete working Dogecoin wallet.
  4. Configure your Dogecoin wallet – once you have downloaded your wallet, follow the online guide is available on the Dogecoin website

The next step is to buy some Dogecoin (DOGE) and move it to your secure wallet. You can leave it there or transfer it if you want to trade Dogecoin. After concluding your trading day, return the remaining Dogecoin (DOGE) to your wallet.

Recap Of Is It Better To Invest Or Trade Dogecoin

We started by asking, "is it better to invest or trade in Dogecoin?" 

It was a tricky question to answer. Due to the lack of price movement, we discovered that trading Dogecoin isn't an option right now. But how about investing in Dogecoin? Is Dogecoin a good long-term investment?

Crypto investors buy and hold (HODL) crypto tokens for a period before taking a profit. With any financial instrument, nobody knows what it will do and when. But, for instance, with Forex trading and investing, we can do technical analysis or fundamental and sentiment analysis and assess probabilities. It gives a fair picture of what may or may not happen.

Investing in Dogecoin is a bit like throwing a dice up in the air. It may land on a six or a one, and there is little, if anything, we can do to predict the potential outcome. There's not enough historical data for cryptocurrencies for traders and investors to identify support and resistance areas and other points on the charts.

Right now, the price of DOGE is a low entry, which makes it attractive to the small investor and the ever-growing public interest in becoming a millionaire from buying cryptocurrencies.

If you decide to go ahead and buy Dogecoin, our 5 tips for investing in Dogecoin (DOGE) are:

  1. Only invest as much as you are comfortable losing
  2. Consider the investment as purely speculative (gambling)
  3. Decide your exit point to remove some or all profit
  4. If the price of DOGE drops, hold your nerve
  5. Monitor Dogecoin news to assess potential price dips or rises
  6. Place your DOGE in a secure wallet

If you want to trade Dogecoin, wait for the price action to move out of consolidation and have active daily movement, rather than the current daily 1 or 2 pips.

Dogecoin could be the next big thing for 2022. Or Dogecoin could fail to make progress as other cryptos gain traction, such as Polkadot (DOT), Solana (SOL), Cardano (ADA), and Shiba Inu (SHIB), which has today pushed Dogecoin (DOGE) off the #9 spot on CoinMarketCap.

Please note that the above information is not providing advice on tax, investment, or financial services. We provide the above information without consideration for risk tolerance and a specific investor's financial circumstances.

Trading or investing in cryptocurrencies may not be suitable for all investors. It does involve risk and the possibility of a loss of capital.

The meme-inspired currency continue to pile pressure on the Dogecoin Foundation to improve the technology behind the blockchain. Because of the friendly nature of the token through its use in several humanitarian courses, many experts believe that Dogecoin’s provision of a quicker and cheaper payment system can transform global transactions effectively. 

Although Dogecoin has been unfortunately associated with several crypto scams that netted hackers millions of dollars, it is still one of the most demanded cryptocurrencies in the world. 

Through its accessibility on CoinFlip’s 1,800 ATMs across the United States and listing on Dallas Mavericks and CovCare as an option of payment, the continuous liquidity being poured on DOGE will reflect positively in its market valuation. 

Therefore, as a novice investor with an eye on the long term, DOGE can bring you consistent passive income.  

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Read More:

Six Reasons Why Dogecoin Has Intrinsic Value

Is Dogecoin Mining Still Profitable?

What Might Happen If You Invest $100 In Dogecoin (DOGE) Today?

How To Make (Or Lose) Money With Dogecoin

3 Reasons To Buy Dogecoin, And 1 Reason To Sell

Is It better To Invest Or Trade Dogecoin - FAQ
Why should I Invest in Dogecoin?
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