Today, speculators appear to be away from their computers. At least, investors in Dogecoin (CCC:DOGE-USD) appear to be. Seeing Dogecoin dropping so dramatically (14% at the time of writing) despite #DogeDay420 is quite intriguing. If anything, I would have expected to see the speculative fervor heat up on this crypto name today.
Alas, here we are. Dogecoin prices appear to be diverging from the broader crypto space. Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD) are both up big today. At the time of writing, the two largest cryptocurrencies are up 2% and 8%, respectively.
Much of today’s drop in Dogecoin prices could have something to do with the absolutely parabolic rise Dogecoin has seen in recent days. Expectations for this altcoin may have simply gotten ahead of what this digital token is worth.
As I have noted in the past, this is a crypto option with probably the most questionable intrinsic value to begin with in the crypto space. It was a digital token created as a joke, with no inherent value other than creating an online community for crypto aficionados.
So, maybe the market is coming to its senses today. Who knows. Here are a few things experts believe are risks being priced in today.
Why Is Dogecoin Dropping?
CoinDesk recently penned an interesting piece on three key risks investors should consider before buying Dogecoin ahead of #DogeDay420. Among the risks identified are: Dogecoin’s unlimited supply, high Dogecoin mining levels and a lack of technical development for this cryptocurrency.
Indeed, these are risks investors should keep in mind.
Additionally, InvestorPlace Web Editor Vivian Medithi’s commentary on two other key risks affecting the broader crypto space of late is worth checking out. Among these, one pertinent risk that investors appear to be pricing in right now is related to regulation. Some speculation this past weekend that the U.S. Treasury may step in to charge financial institutions on the basis of using cryptocurrencies to launder money has raised eyebrows. As has previous discussion on cryptocurrency bans, including in India and Turkey.
Accordingly, I’d recommend investors take the advice of InvestorPlace Web Content Producer Sarah Smith in focusing on setting a target price for cryptocurrencies like Dogecoin, and sticking to it. Dogecoin remains a highly speculative asset. Nobody ever got hurt from taking profits.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.