The people decide why Dogecoin (CCC:DOGE-USD) has value, not experts. Staunch critics are wrong, because cryptocurrencies do have value. They also serve important purposes in the betterment of our modern world. Before we delve into this debate I’d like to comment on the state of investment affairs.
I remember days when there were rules on Wall street and traders feared them. Investors respected the Securities and Exchange Commission (SECO) and improper situations were rare, and if they happened were big news.
Now, it seems that it’s a free for all with blatant manipulation on a regular basis. This is the wild west of investing as celebrities knowingly influence asset prices without repercussions. The most recent example of this is Tesla (NASDAQ:TSLA) CEO Elon Musk roiling cryptocurrency markets. His interference with Dogecoin started last year.
Back then DOGE investors were happy, since the value soared on his comments. This past weekend he caused a mess, and it crashed in mere hours. It would be interesting if the authorities will investigate Musk’s trading activities around his tweets. Knowing how rich he is, I would guess he wasn’t seeking financial gain. The shameful part is that real people suffer severe consequences for the fun of others.
I am not here to vilify one person because the playground is full of bullies these days. My complaint lies with the system that allows this to happen. For now, Dogecoin is in the middle of this tempest of rhetoric interference in its value. This makes for exciting trades but ruins the legitimacy of the investment.
Dogecoin Moves Fast From Special Circumstances
Critics of crypto already use the volatility of the e-coin to demean them. Big gyrations from such artificial stimuli strengthens their arguments. I am confident that blind hate of crypto is wrong, so I wish for this mess to stop soon.
These shenanigans do not pertain only to cryptocurrencies. The retail investors are now banding together on social media to face Wall Street. Trading in bands means giving them a fighting edge against hedge funds. The collateral damage falls in the lap of the rest who still play by the rules.
I rather enjoy seeing “the house” lose a few rounds to Reddit. But cheating is wrong, regardless of the motive. Manipulating stock prices makes for a hazardous investment environment. Martha Stewart did a stint in the clink for mere obstruction or impropriety. She is probably wondering in hindsight why this is fair.
Nevertheless, the argument for having crypto is valid. We need assets like Dogecoin to propel fintech forward. We’ve been loitering too long but last year lit a fire under the subject. Now all major transactors are chasing supremacy in the new world of e-transaction. Blockchain is a huge part of it thanks to cryptocurrency. The more popular e-coins become, the more companies tailor to their needs.
Investors Beware of the “Cheap” Trap
Dogecoin traders need to know that dealing with fast moving e-coins elevates the need for discipline. Chasing runaway values is a recipe for potential disaster. I understand the draw of loading up on “cheap” coins in hope of riches. But just like penny stocks, a low price coin can still lose 100% of your investment.
I am confident that these comments will fall on many deaf ears. The upside potential has occasionally been jaw-dropping. For the last few days, investors have been learning that it’s a knife that cuts both ways. To be successful, the first decision to make is determining the goal. If the purchase is an investment, then timing is not that important. Investors should accumulate a little bit of Dogecoin at a time. Space the purchases far apart in time or levels for best results.
Traders, on the other hand, can get help from charts where the same rules apply. Dogecoin is getting tighter in range and coming to a point. Soon there will be a breakout and we don’t yet know which way. But I would buy the dip especially below 45 cents. I would also chase a momentum trade if it breaks out above 55 cents.
Over-exposure risk to crypto is real, but I think it would cause a temporary fade. The first Bitcoin (CCC:BTC-USD) investors at $19,000 suffered, but eventually broke records.
Last Saturday, my trip to the gym turned into a crypto trade session. My friends, until now, had zero interest in stocks. Now, they all have crypto accounts and own a collection of coins. Ironically they called them shares and one of them added more “shares” as we talked.
On the date of publication, Nicolas Chahine did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Nicolas Chahine is the managing director of SellSpreads.com.