We live in an era where markets are controlled by memes, communities and inflated expectations of retail investors (or day traders to be precise). Here, I am not only talking about crypto markets because of some altcoins but stock markets as well. The case we have seen with GME (GameStop) and some other penny stocks this year is enough to prove it.
We all know that crypto markets are more volatile than any other markets. For example, we saw a cryptocurrency like Dogecoin rally from $0.004 to almost $0.40 (at its all-time high) in a span of just four months, which is an almost 10000% rise in the price from 1st January. If we take that into account then a person would have ended up with 100 times his/her original investment if he/she had invested money on 1st January 2021.
Dogecoin which started as a meme cryptocurrency in 2013 is now suddenly worth nearly $42 billion and ranks in the top 10 list of cryptocurrencies. If we compare that market cap, then it’s more than some popular cryptocurrencies like Cardano, Polkadot, Litecoin, Chainlink and VeChain.
A meme cryptocurrency with a circulating supply of 129,237,971,710 (as of writing this article) is chasing a market cap of $50 billion. Yes, it’s completely parabolic but it’s true.
The simple answer is celebrities and Dogecoin’s reference to the famous Shiba Inu dog breed which is also a viral internet meme known as “doge”.
If you are on Twitter, you know it’s because of Elon Musk that the prices are so volatile. Just a single tweet of his is capable of completely changing the direction of the market and these days Dogecoin seems to be his favourite cryptocurrency.
To learn the answer to this question, we have to understand every aspect of this cryptocurrency.
Dogecoin is a cryptocurrency that totally relies on the hype for its price to surge. There are no technicalities to it. Yes, it could go to $1 but a downfall is also an equal possibility. It’s very hard to say or predict where Dogecoin will go.
You should only invest as much as you are comfortable with. Yes, that’s a blunt answer but that’s the simple explanation to it. You should never go and invest more than the amount you can afford to lose. To sum it up, it’s a very risky investment.
Note: This article or any part of it is not financial advice. The aim is to educate readers. Investors are advised to invest at their own risk.