Cryptocurrencies have been a great addition to the investment world. But where does that leave something like Dogecoin (CCC:DOGE-USD)?
Adding cryptocurrencies into the market has brought an entire new group of investors into the mix. Predominantly younger investors, this group has made anywhere from extra pocket change to a considerable fortune in cryptocurrencies.
The latest push has not only sent the group to new highs, but also brought in a wave of corporate buyers.
With Dogecoin, though, it doesn’t seem like the highest quality cryptocurrency to go with. Admittedly, I’m not a raging crypto bull who’s looking to replace the dollars in my wallet with Bitcoin (CCC:BTC-USD) and pay for my morning coffee.
But I do recognize a solid technical pattern when I see one, and these assets tend to trade quite technically.
What’s Up With Dogecoin?
Dogecoin erupted in late January, soaring 340% in a single day and closing at about 4.7 cents. It consolidated for a few days and pushed higher yet again. Ultimately, Dogecoin topped just below 9 cents apiece.
It then went to fall by about 40% within a few weeks.
If investors are simply looking to plop down some speculation money, this one may be worth their while. Remember, with speculation funds, it’s like trading options — we have to be prepared to lose everything we put into it.
With Dogecoin, I don’t know if it ever goes away completely and becomes irrelevant. But I don’t know that it has the staying power to make it worth owning through the volatility.
Anytime something trades for less than a dime, investors have to be willing to embrace the speculative nature of the asset — that’s just the way it is.
If not for a tweet from Tesla (NASDAQ:TSLA) CEO Elon Musk, how many people would really even know about Dogecoin? That was on Feb. 4 — after Dogecoin’s first big rally — so admittedly, it wasn’t completely unknown. With stimulus checks now on their way as part of the $1.9 trillion novel coronavirus relief bill, speculators will have fresh funds to deploy as well. So perhaps Dogecoin does have upside.
The technicals even look solid.
Over all of its major moving averages and breaking out of downtrend resistance gives bulls a clear map. Over 6.3 cents, and 7 cents is possible. Above 7.5 cents, and 8.2 cents or higher is possible.
However, below 5 cents, and Dogecoin will lose a bulk of its momentum.
Go With Bitcoin Instead?
Breaking down the technicals of a sub-10 cent asset seems ridiculous, but if it can be traded, we can look at the trends.
Instead of that, though, consider some of the more mature cryptocurrencies. While Bitcoin and Ethereum (CCC:ETH-USD) are subject to volatility as well, it’s not quite like what we’re seeing with Dogecoin.
With a plethora of ways to buy these cryptocurrencies — via Cash App, Coinbase, PayPal (NASDAQ:PYPL), futures contracts and more — there’s more volume and more liquidity. While Bitcoin may not be considered a “safe” investment versus the whole realm of investment options, it’s considered the safest in the crypto space.
Adding to that, there are big buyers of Bitcoin. Sure, traders and investors — including the legendary Paul Tudor Jones — have gotten on board, but so have big companies. Tesla has been a buyer of Bitcoin. So has Square (NYSE:SQ), Microstrategy (NASDAQ:MSTR) and others, as companies are now adding a small percentage of their cash holdings to Bitcoin.
Even Ethereum offers more stability than Dogecoin. Ethereum is what’s driving the whole new rage with the Non-Fungible Token (NFT) market at the moment. Bitcoin Cash (CCC:BCH-USD) is another alternative in the crypto space.
So, could Dogecoin be an explosive winner, perhaps even one of the elusive “10-baggers” by rallying up toward $1? Of course it could be. But unless investors are looking purely for speculation, I prefer some of the more well-known cryptocurrency options out there.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.