Trading Dogecoin (CCC:DOGE-USD) is hazardous to your nerves. Unlike popular belief, it is not that potentially detrimental to your portfolio.
I am bullish crypto in general, so it comes down to picking entry levels. The easy way to invest in them is by adding in batches spread out over time. This worked well for most asset classes and these are no different.
It’s been exciting watching the price action whipsaw from one extreme to another. Rhetoric from social media influencers added fuel to the flames. Case in point the ruckus that Tesla (NASDAQ:TSLA) CEO Elon Musk has caused.
This has not helped Dogecoin find a floor. It’s been on the skids for months. It is down 75% from its May highs and printed 16 cents just yesterday. When a stock hits a prior bounce level, it tends to find support. DOGE double-bounced in June with a 70% rally. My assumption is that it will do it again here.
Buying the dip has worked and it should work again. However, if the bulls lose the floor then get ready for another leg lower.
Get Over the Crypto Hangups
Most on Main Street are still non-believers in crypto. And a big percentage of the people are haters. I aim to change that one reader at a time.
First, I will tug on the FOMO heart strings. The opportunity in crypto is undeniable. Bitcoin (CCC:BTC-USD) has been the best investment by far for a decade. Call me crazy, but that’s a definite reason to participate. Opting out of or shorting cryptocurrency means to knowingly pass up the best gig. Denying what’s already in front of us is silly. Fake or not, it cost 30,000 real dollars. That’s all I need to know to want to trade it.
Many critics cannot get over the fact that it is synthetic. The only difference between it and gold is that one is found in the ground and the other was created by humans. Art is synthetic yet we accept it is valuable. A bunch of splatters on a canvas suddenly makes it worth millions. We make cars and assign a value to them, etc. The argument is a simple as that: Enough people love it + there isn’t enough of it to go around = Value!
There will be buyers in Bitcoin and Dogecoin on every dip. I wrote about many opportunities in crypto over the years – not all bullish. Today I am writing about looking for entry opportunities on this dip.
If I am long DOGE already I don’t add yet. The risk from Bitcoin losing footing is too great. Technically, BTC would be in danger of a major correction if the bulls fail to hold support. Onus is on the bulls to show they can hold the last bounce came from $28,800. Last night they did, but it’s still too close.
Dogecoin Opportunity Is Here and Potentially Lower
If the crypto correction unfolds, it brings an excellent buying opportunity in Dogecoin. Critics should just let go of their hatred and trade the action. It is exciting, fast and furious. My easiest wins this year have come from buying the dips in crypto. They are speculative bets, so I acknowledge the risks and keep the size appropriate.
Dogecoin is not a currency nor does it need to be one. Gold isn’t, yet we accept the validity of investing in it. In fact, I can liquidate DOGE and use the proceeds for payment instantaneously. I cannot do that with gold.
The other sore subject is the criminal aspect. The argument that crypto facilitates crime is ridiculous. There is no better illicit activity facilitator than actual cash. Criminals have used cash for centuries to commit crime. Yet, we don’t opt out of using cash for that reason.
The crypto sphere is too new for us to assume we are experts. I am realistic about my knowledge levels and I have a lot to learn. Success comes from using simple logic and backing it up with strong charting skills. As a result I am confident in my trades so far.
This current dip in Dogecoin is viable provided we accept the possibility of new lows. Therefore, partial positions only for now, leaving room to add later. If the crypto crash happens, I would buy the dip in size.
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.