Janice R. Andrews
The value of Dogecoin (CRYPTO: DOGE) has fluctuated significantly in recent years. The Shiba Inu dog meme served as the inspiration for Dogecoin, which was first introduced in 2013 as a spoof of Bitcoin (CRYPTO: BTC). Prior to an unexpected spike in 2021, when its price shot from $0.01 at the start of the year to an all-time high of $0.73 by May 8, it had little worth.
There were two main elements that drove this tremendous growth. First, a frenzy of investing in cryptocurrencies, meme stocks, and other speculative assets in 2021 was caused by a confluence of low interest rates, social media excitement, and stimulus cheques. Second, Dogecoin’s price skyrocketed because to high-profile sponsorships from celebrities like Snoop Dogg, Mark Cuban, and Elon Musk.
But the bliss did not last long. At the moment, Dogecoin is worth about $0.16. As a result of investors moving away from speculative assets like cryptocurrencies due to rising interest rates, there has been a decline known as a “crypto winter.” This time has seen the demise of several lesser cryptocurrencies.
Some investors are nonetheless positive about Dogecoin’s chances of making a return in spite of these difficulties. One of the “safest trades” available, according to popular cryptocurrency researcher Altcoin Sherpa, who has roughly 217,000 followers on X (previously Twitter), is purchasing Dogecoin and hoping for a 150% increase to $0.40. But is this forecast accurate, and should investors be optimistic about this erratic meme coin?
What Is Dogecoin’s Bullish Case?
Altcoin Sherpa’s optimistic view of Dogecoin depends on a number of variables. He thinks that because of Dogecoin’s high liquidity and comparatively small downside when compared to other meme currencies, retail investors would come back to it. Additionally, he thinks Dogecoin is more appealing than a lot of lesser cryptocurrencies.
This optimism is largely a result of Elon Musk’s influence. Price increases have previously been attributed to Musk’s comments on Dogecoin, Tesla’s acceptance of Dogecoin payments, and Twitter’s brief switch to a Shiba Inu logo for its logo. According to Sherpa, one tweet from Musk may once more “blow it up.”
Difficulties with Dogecoin in Comparison to Other Cryptocurrencies
Dogecoin encounters a number of challenges that Bitcoin and Ether do not, despite its stability in comparison to lesser cryptocurrencies. Although some companies accept it as a form of payment, its price volatility makes it impractical to use as a standard payment option. Because of its volatility, it is positioned less as a serious currency and more as a novelty or marketing tool.
Dogecoin also faces significant regulatory obstacles. Dogecoin was removed from the “green list” of regulated cryptocurrencies by the New York State Department of Financial Services in September of last year. The list also contains Bitcoin, Ether, and a number of stablecoins like PayPal and Gemini. This omission highlights Dogecoin’s speculative nature and raises questions about its sustainability over the long run.
The blockchain technology used in Dogecoin is another important drawback. Dogecoin, which split out from the Bitcoin network, is not designed to create decentralized apps (dApps). Dogecoin uses the energy-intensive proof of work (PoW) technique for mining, in contrast to Ethereum, Solana, and Cardano, which utilize the more energy-efficient proof of stake (PoS) approach. In contrast to other decentralized platforms, Dogechain, a distinct blockchain network, has not attained mainstream usage despite being introduced to serve Dogecoin-based applications.
Additionally, there are indications that investor enthusiasm for Musk’s support of Dogecoin is decreasing. Musk tweeted about Dogecoin’s popularity in April, but there was no reaction from the market. Altcoin Sherpa’s assertion that a single tweet might dramatically increase Dogecoin’s price is called into question by the declining influence of Musk’s tweets.
Should Investors Place Future Bets on Dogecoin?
Dogecoin may have a better future than many lesser cryptocurrencies, but it is speculative to expect a 150% increase in value. The current state of the market is still difficult due to rising interest rates and the possibility that new Bitcoin and Ether ETFs may divert investors’ focus from meme currencies and smaller altcoins.
Investors need to use caution while dealing with Dogecoin. To avoid falling back on the forecasts of anonymous crypto experts, it is essential to learn about the hazards and carry out in-depth investigation. As easily as it may see a sharp decrease in value, Dogecoin could also see the predicted rise.
Dogecoin has a large fan base despite its uncertain future due to its prior volatility and celebrity sponsorships. When making investing selections, investors should carefully consider the risks involved and keep up to date on regulatory developments, market circumstances, and market conditions.
