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It’s funny how quickly the tide can turn. Dogecoin (CCC:DOGE-USD) was all the rage in May. However, recently, many Dogecoin traders are treating the dog-themed cryptocurrency as if it were yesterday’s news.
Source: Wollertz / Shutterstock
However, there is another point of view. Die-hard Contrarians should be happy that the hype period has come and gone as this could be a prime buying opportunity.
The target price of $ 1 is still within reach, even if it is further away now. Besides, if someone liked Dogecoin for 70 cents, shouldn’t they love it for under 25 cents?
Not everyone is freaking out about the recent crypto route. Some stay in the trade – easier said than done, but the “HODLers” could prevail in the end.
Analysis of the Dogecoin price
Personally, I tend to see Dogecoin like a penny stock. By that I mean that it is cheap, volatile, poses increased risk, but also has the potential for big gains.
So, like I said, please don’t mortgage your home to top up DOGE – or any other cryptocurrency. Investors should keep their position sizes small.
And don’t chase vertical price movements. Dogecoin, in particular, fined anyone who bought near the 52-week high of around 74 cents in May 2021.
On July 9, DOGE was trading at just under 22 cents. Value investors may be reluctant to buy a cheap crypto coin, but there is a possible bargain here after the price plummets.
The musk factor
Sam Bankman-Fried is a billionaire who happens to be the CEO of the cryptocurrency exchange FTX. And apparently he’s not ashamed of finding out what could have been the main price driver for Dogecoin.
“Elon is a strong piece of it, he is currently the most influential man in the world when it comes to investing,” said Bankman-Fried.
I probably don’t need to make it clear that it is related Tesla (NASDAQ:TSLA) CEO Elon Musk here.
In fact, the impact of Musk on the cryptosphere is so profound that there is even a term for it: the “Musk effect”.
He is known to tweet that “SpaceX will bring a literal Dogecoin to the literal moon”.
And at a more serious moment, Musk tweeted, “Working with Doge developers to improve the efficiency of system transactions. Potentially promising. “
Tweets like this certainly made the Dogecoin rally easier. But can the former joke coin get their mojo back without Musk’s constant support?
“Plant of the year”
The answer, if it is in the affirmative, is to shift the focus away from DOGE as the celebrity-backed taste of the day, to a legitimate currency that the crypto community can support.
For his part, it seems that Michael Kamerman, the CEO of the online trading platform Skills, doesn’t seem to be in panic mode.
“What happens now shouldn’t be a sign of concern,” Kamerman said. Additionally, “when the recent news has something to say, it shows a pattern of Dogecoin ups and downs triggered by social media.”
And as far as Bankman-Fried is concerned, he even went so far as to call Dogecoin “Asset of the Year 2020 and 2021”.
This may or may not be an exaggeration, but there is one notable development that could attract more blockchain enthusiasts.
Core developer Patrick Lodder and his team have reportedly proposed a new fee structure for Dogecoin. And guess who is for it?
A June 28 tweet from Musk added, “Important to Support” – not his most enthusiastic endorsement, but it is something.
Perhaps more importantly, the proposed changes are aimed at lowering certain fees related to Dogecoin. They are also intended to strengthen “the sovereignty of each individual node operator and of the community as a whole”.
The conclusion to Dogecoin
You don’t have to agree that Dogecoin is “Asset of the Year” to take a small position in it.
Instead, you can just accept the risks and enjoy the ride.
And when it hits $ 1, don’t thank me or Elon Musk. Thank you to the developers and community who helped DOGE grow from a joke to a digital asset that cannot be ignored.
At the time of this writing, David Moadel held positions (neither directly nor indirectly) in the securities discussed in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s posting guidelines.
David Moadel has provided compelling content – and occasionally pushed the boundaries – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga and (of course) InvestorPlace.com. He is also a senior analyst and researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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