At this point in the game, I can’t help but feel cryptocurrencies have completely jumped the shark. Bitcoin (CCC:BTC-USD) just hit a new all-time high above $68,000, pulling other altcoins along for the ride. While I’m hesitant to give dump-it-all-now guidance (because who knows how high they can go), I think it’s wise to reduce your crypto exposure and only play speculative tokens like Dogecoin (CCC:DOGE-USD) with money you can afford to lose.
That being said, the opportunity in DOGE may lie in your ability to judge behavioral trends.
Why Everyone Can’t Be Rich
“Forget this guy! Let’s dive into this raging bull market,” I hear some of you saying. I get it. But I think you should consider the limitations of unfettered capitalism.
I’m sure you’ve seen the headlines saying that the richest among us are the ones who have benefited the most during the pandemic. Once enough wealth transfers over to the rarefied elites, there will be fewer people to exploit. Eventually, cryptos — particularly disposable meme tokens like Dogecoin — will collapse. We can’t all be rich because affluence is subsidized by the poor, ironically enough.
It’s the reason why you don’t choose to buy a Ferrari (NYSE:RACE), but Ferrari essentially chooses you. If everybody had access to one of these bad boys, the brand would no longer be special. It’s the envious eyes on the outside looking in that give Ferrari its power and influence.
Admittedly, this is a long-winded way of saying you should be extremely careful with Dogecoin. Yes, there are plenty of reasons why, as a speculative investment vehicle, DOGE is appealing. Unlike high-brow blockchain projects like Ethereum (CCC:ETH-USD) and Cardano (CCC:ADA-USD), Dogecoin emphasizes cheerful community-driven gambling. It’s not here to save the world; it’s simply here to make you money.
Plus, its low price — it’s currently trading at less than 3o cents — allows investors the psychological satisfaction of accruing a significant position.
What Puppy Farms Teach Us About Dogecoin
Recently, a Bloomberg report noted that Shiba Inu (CCC:SHIB-USD), a speculative crypto similar to Dogecoin resulted in a buying frenzy of the actual dog breed. Dogecoin, which used the likeness of a Shiba Inu on its digital token first, has been linked to a similar demand spike that even raised concerns about abuse and mistreatment.
Shiba Inus are not like your typical family-friendly Golden Retriever. Like the coins with which they are associated, these hunting dogs are stubborn and unpredictable. They are more similar to their wolf ancestors than many other types of domestic dogs.
This trend not only raises major ethical concerns, but it highlights the irrationality of Dogecoin and other random manifestations of blockchain. Honestly, why would anyone buy a dog breed based on the name of their favorite investment?! It’s akin to signing up for the Church of Satan because you bought a Dodge Hellcat.
Yet, this irrationality is actually where the opportunity may lie for Dogecoin. If you’re an expert in groupthink and human behavior, you can possibly make a ton of money with DOGE.
Forget the technicals. Forget the fundamentals (it’s questionable if cryptos have any). Instead, gauge your entry and exit points based on your knowledge of behavioral analytics. It’s the truest compass we have.
A Trade for the Bold (and the Unmarried)
I must stress that buying Dogecoin — or any other crypto, established or junk — is extremely risky. If you don’t know how to read people, I’d stay away from DOGE. That especially goes for those who have to answer to someone, say a spouse or partner. You might find yourself untethered from your most important relationships.
But if you’re good at assessing behavioral dynamics, you might want to take another look at this canine-inspired meme token.
Recently, I’ve been binge-watching this excellent YouTube channel by Dr. Todd Grande. If I had Dr. Grande’s expertise in mental health and science, DOGE and the other canine-related coins would be the only assets I’d trade.
Ultimately, investing in crypto comes down to your individual risk-reward profile. If you don’t mind living dangerously and can take responsibility for your actions, DOGE might work out for you. But if you can’t stomach double-digit losses over a 24-hour period, well, why did you even read this article?
On the date of publication, Josh Enomoto held a LONG position in DOGE. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.