It’s starting to get humorous, witnessing frazzled market experts revising their price predictions again and again for Dogecoin (CCC:DOGE-USD). As usual, they’re chasing after the Dogecoin price instead of taking a clear-minded, long-term view of the digital asset’s potential value.
Granted, it’s fun to watch the back-and-forth debate change its tone every time the price lurches up or down. And no doubt about it – it’s been lurching lately.
At the end of the day, informed investors have to process a slew of amateur and so-called expert opinions, the most reliable data and their own gut feelings.
So, let’s take a gut check right now as we delve into the meme coin that somehow became Elon Musk’s pet project. It might be a train wreck, but like it or not, you know you just can’t look away.
An Odd Start for Dogecoin
While it’s the talk of the street today, Dogecoin had humble beginnings. In fact, it started out as a joke coin in 2013, founded by Jackson Palmer and Billy Markus.
Apparently, Palmer and Markus just wanted to satirize the growth of altcoins at that time. By the end of the year, however, the coin started getting more mentions on Twitter (NYSE:TWTR).
Unfortunately, there’s no established cap on the supply of Dogecoins. As a result, the coin can be susceptible to the influence of inflation.
Nonetheless, there was a ramp-up in the token’s price last year. This may have been precipitated by a TikTok challenge, of all things.
Reportedly, in June of 2020, TikTok user James Galante asked his followers to buy Dogecoin, even going so far as to claim that they could “all get rich” by pushing up the coin’s value.
Then there were the Musk tweets and the infamous Reddit pump. I chronicled those events in a recent InvestorPlace article.
Here Comes the Peanut Gallery
I won’t even try to provide an up-to-the-minute account of where the Dogecoin price is now. It reached a high of around 43 cents not long ago and then retraced to 30 cents, but heaven only knows where the price will be by the time you read this.
Beyond the hard-to-track price action, stoking the flames of confusion even further is the slew of irrepressible voices on social media.
I’m showing my age here, but I call them the “peanut gallery.” This is an old reference to the hecklers who sit in the cheap seats in a theater.
Nowadays, the peanut gallery is online, and mostly on Reddit and Twitter. For instance, a crypto crash ensued after somebody tweeted, “U.S. TREASURY TO CHARGE SEVERAL FINANCIAL INSTITUTIONS FOR MONEY LAUNDERING USING CRYPTOCURRENCIES -SOURCES.”
I searched high and low for a credible source to confirm this claim, but couldn’t find anything. Nonetheless, postings like this can have an influence on asset prices and quickly wipe out people’s wealth.
Just Enjoy the Ride
On the other end of the spectrum is Kiersten Crum, also known as @stonk.queen on the TikTok social media platform.
As InvestorPlace contributor Thomas Yeung explains, Crum represents an ambitious and informed generation of investors.
“The young stock market expert has amassed thousands of social-media followers looking for tips on how she turned $500 into $50,000,” Yeung reports.
I don’t make a habit of aiming for 100x returns, but Yeung’s point is well taken. As the mainstreaming of Dogecoin takes hold, investors can either enjoy the ride or watch from the sidelines; complaining about the price rally isn’t especially productive.
If you couldn’t care less about celebrity chef Guy Fieri’s tweet that the coin’s “Rollin’ out to the MOON,” I completely understand.
Probably the best course of action is to ignore the opinions and stick to the data. And for the time being, the data reveals a digital asset that’s in a powerful multi-month uptrend.
The Bottom Line
It’s going to bother some folks that Dogecoin is so volatile, or that the price has gone parabolic, or that it started out as a joke.
Go ahead and pick your reasons to dislike it, if you must. Or better yet, just accept the reality that this odd little meme coin is here to stay.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.