It’s funny how quickly the tide can turn. Dogecoin (CCC:DOGE-USD) was all the rage in May. Lately, though, many Dogecoin traders are treating the canine-themed cryptocurrency as if it’s yesterday’s news.
However, there’s another way of looking at this. Dyed-in-the-wool contrarians should be happy that the hype phase has come and gone, as this could present a prime buying opportunity.
The $1 price target is still within reach, even if it’s farther away now. Besides, if anyone liked Dogecoin at 70 cents, shouldn’t they love it at under 25 cents?
Not everyone is freaking out about the recent crypto rout. Some folks are staying in the trade — easier said than done, but the “HODL-ers” could prevail in the end.
Analyzing the Dogecoin Price
Personally, I tend to think of Dogecoin as akin to a penny stock. By that, I mean it’s low-priced and volatile, presenting elevated risk but also the potential for great reward.
So, as I’ve said before, please don’t mortgage your house to load up on DOGE — or any cryptocurrency, for that matter. Investors should keep their position sizes small.
And don’t go chasing after vertical price moves. Dogecoin in particular punished anyone who bought near May 2021’s 52-week high of around 74 cents.
On July 9, DOGE was trading close to 22 cents. Value investors might bristle at the thought of buying a cheap crypto coin, but there’s a possible bargain here now that the price has pulled back.
The Musk Factor
Sam Bankman-Fried is a billionaire who happens to be the chief executive of cryptocurrency exchange FTX. And apparently, he’s unashamed to pinpoint what may have been Dogecoin’s chief price driver.
“Elon is a powerful piece of this, he is actually the most influential man in the world when it comes to financial assets right now,” Bankman-Fried declared.
I probably don’t need to clarify that he’s referring to Tesla (NASDAQ:TSLA) CEO Elon Musk here.
Indeed, Musk’s impact on the crypto-sphere is so profound that there’s actually a term for this: the “Musk effect.”
Famously, he tweeted that “SpaceX is going to put a literal Dogecoin on the literal moon.”
And in a more serious moment, Musk tweeted, “Working with Doge devs to improve system transaction efficiency. Potentially promising.”
Tweets like these most assuredly facilitated Dogecoin’s rally. But can the former joke coin get its mojo back without Musk’s constant support?
“Asset of the Year”
The answer, if it’s in the affirmative, lies in shifting the focus away from DOGE as a celebrity-backed flavor of the day and towards a legitimate currency that the crypto community can get behind.
For his part, it appears that Michael Kamerman, the CEO of online trading platform Skilling, doesn’t appear to be in panic mode.
“What is happening now shouldn’t be a sign of worry,” Kamerman assured. Moreover, “if the recent news is anything to go by, it shows a pattern of dogecoin soaring and diving, sparked by social media.”
And as for Bankman-Fried, he went so far as to call Dogecoin the “asset of the year for 2020 and 2021.”
That might or not be an exaggeration, but there is a notable development that could bring more blockchain enthusiasts into the fold.
Reportedly, core developer Patrick Lodder and his team have proposed a new fee structure for Dogecoin. And guess who’s in favor of it?
A June 28 tweet from Musk chimed in, “Important to support” — not his most enthusiastic endorsement, but it’s something.
Perhaps more importantly, the proposed changes aim to lower certain fees associated with Dogecoin. Plus, they’re intended to enhance “the sovereignty of each individual node operator and the community as a whole.”
The Bottom Line on Dogecoin
You don’t have to agree that Dogecoin is the “asset of the year” to take a small position in it.
Instead, you can just accept the risks and enjoy the ride.
And if it gets to $1, don’t thank me or even Elon Musk. Thank the developers and the community that helped DOGE evolve from a joke to a digital asset that can’t be ignored.
On the date of publication, David Moadel 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.
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.