Best Cryptocurrency Exchange Reddit

Down 63%, Is It Time to Buy Dogecoin?

Down 63%, Is It Time to Buy Dogecoin?
Written by publisher team

Dogecoin (CRYPTO: DOGE) It is down more than 60% from an all-time high of $0.74 as the hype fades and the theft of rival meme coins thundered out. But now that it’s collapsed, should new investors buy the dip? Let’s explore the advantages and disadvantages of assets to answer this question.

Dogecoin Pros:

Image source: Getty Images.

1. First mover advantage

Launched in 2013, Dogecoin is the original meme coin, a group of cryptocurrencies designed to go viral by exploiting hype and humorous themes. Meme coins generally do not offer innovative uses of blockchain technology. Instead, they rely on the “big idiot” theory, which suggests that investors can take advantage of unprofitable assets because others will buy them for more in the future.

With eight years of history, Dogecoin is ahead of major cryptocurrencies such as Ethereum (established 2015), Cardano (2017) and Solana (2020). And its age gives it advantages in brand recognition, which can lead to staying power and acceptance.

According to data from Cryptocurrency Directory, more than 1,900 merchants accept Dogecoin as payment, and it’s not too bad for a jokingly designed coin.

2. Her strong community

Dogecoin’s first mover feature has given it a strong community, which is crucial for meme coins as they rely on hype rather than fundamentals. The asset is watched by 1.3 million people on (compared to Bitcoin 2.7 million), indicating that many investors are interested in its price movements. The Dogecoin Reddit community has 2.2 million subscribers.

Reddit is important because it is known for creating memes and making topics compete. Dogecoin is also popular with Tesla CEO Elon Musk, who owns Dogecoin (along with Bitcoin and Ethereum) and is known to pump assets to 63 million Twitter Followers.

Dogecoin Cons:

flash sale stock chart

Image source: Getty Images.

1. Competition from rival meme coins

While Dogecoin has a first-mover advantage, it faces increasing competition from competing meme coins designed to play on the same traits that made Dogecoin popular: the Shiba Inu dog breed (part of the Dogecoin brand) and Musk, which has a cult following in the cryptocurrency community.

In early October, Musk tweeted, “My Shiba puppy will be called Inu Floki,” sparking a tidal wave of retail interest in the namesake cryptocurrency. The most famous of these assets, Shiba Inu, by 60,000,000% since inception. Others like Floki Inoue It rose over 1,000,000%. The growth in these competing assets could steal some of Dogecoin’s thunder as investors look for the next best thing.

2. Double his assets

Being an ancient cryptocurrency, Dogecoin was designed to serve as a store of value and a medium of exchange. But it has internal inflation with the number of coins (currently 132 billion) programmed to expand by 5 billion annually in perpetuity, potentially eroding their value in the long run.

Dogecoin also does not enable users to create decentralized applications, which are self-executing programs that allow users to interact on the blockchain without an intermediary.

The newer meme coins are building competitive moats for themselves by creating a blockchain-based ecosystem for their tokens. For example, Shiba Inu developers have created a complementary decentralized exchange called Sheba Swab, which will allow users to exchange their Shiba tokens for other assets without a central broker. As blockchain technology continues to improve, Dogecoin may lag further behind its competition in functionality and potential uses.

Conclusion: Dogecoin is still risky

The cryptocurrency market is known to be difficult to predict, but the risks of investing in Dogecoin seem to outweigh the rewards. While the coin first mover feature gives it valuable brand recognition, it will struggle against newer meme coins with superior functionality and use cases.

And with internal inflation, Dogecoin may also underperform as a long-term store of value — unless Elon Musk keeps pumping, that is.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

About the author

publisher team