As my InvestorPlace colleagues Mark Hake and Will Ashworth have recently discussed, this “jokecoin” remains more popular in terms of web searches than established cryptos like Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD). It’s also still making headlines, as seen in the recent Binance/Musk spat (more below).
Does this continued popularity point to it being a buy right now? Not so fast. In the past few months, DOGE-USD has bounced between 20 and 30 cents. The fact it’s still in the public eye bodes well in terms of it staying within this trading range. But I wouldn’t count on this translating into another “wave” of speculative frenzy.
It makes sense why many are still interested in rolling the dice with Doge. Down more than 70% from its all-time high, a “comeback” would certainly mean triple-digit percentage gains for those buying it right now. Yet given that there are scores of better high-risk, high-possible return crypto plays out there? It makes little sense to waste your time (or risk your capital) on this puppy.
The Latest with Dogecoin
Tesla (NASDAQ:TSLA) CEO Elon Musk, this crypto’s main booster, plays a big role in keeping it popular among the public. Even if he’s the one that caused it to tumble back in May. His support of its development, plus his touting about it, has likely helped it, and other “pupcoins” like Shibu Inu (CCC:SHIB-USD) remains widely followed by the trading public.
Musk’s heavy hand in the Destiny of Dogecoin continues, as seen in the most recent news about it. As you may have heard, the tech impresario took it upon himself to call out crypto exchange Binance, after users of the exchange were unable to withdraw this token due to a system glitch. Within days of Musk’s tweets, the platform fixed the issue.
As our William White reported Nov 29, news of this helped give DOGE-USD a slight boost. However, this is likely to wind up being a short-lived pop, rather than the start of a sustained spike in price. Similar news items like this in the future will likely have the same impact.
Doge makes headlines, moves up a few points, falls back, repeat. Expect this to be how things play out in the coming months.
You’re Barking Up the Wrong Tree if You Think a Comeback’s Possible
Elon Musk’s involvement is a major driving of the continued popularity of Dogecoin. But other factors, such as its perceived potential to embark on an epic price rebound, likely plays a role too. The fact it has a low per-unit price also plays a role. Why? It creates the illusion that it has greater upside potential than coins/tokens sporting much higher per-unit prices.
Put simply though, if you’re thinking of buying this as a crypto comeback play, you’re barking up the wrong tree. Popularity may help keep it steady, as it’s creating an equilibrium where aspiring bottom-fishers are buying, and early movers are taking profit. But to move up in price? It’s going to need more on its side. First, it’s going to need to become seen as “investment grade” by institutional investors (i.e. “the smart money”).
Second, and more importantly, it needs to make material improvements to its functionality/utility, pronto. If it fails to make serious improvements soon, it will have slim chances of catching up to “Ethereum killers” like Cardano (CCC:ADA-USD) and Solana (CCC:SOL-USD).
In fact, if you’re looking for altcoins to make a high-risk wager on, those make for better choices. Assuming they continue to level up in terms of scalability, speed, and DeFi (decentralized finance)/dApp (decentralized app) capability? Either one, or both of them, could result in triple-digit percentage gains for investors buying them today.
Bottom Line on Doge
The public may remain fascinated with the DOGE-USD saga. Due to both Musk’s involvement, plus the belief that due to its low price, and the fact it’s down more than 70%, a price rebound is “due.”
However, don’t expect its popularity to translate into higher prices. This is instead enabling speculators who “got in early” to cash out. Don’t count on an epic comeback either, as this crypto so far has made little progress joining the ranks of the top altcoins out there, the “Ethereum killers.”
More likely to tread water than soar in price from here, skipping out on Dogecoin is your best move.
On the date of publication, Thomas Niel held long positions in Bitcoin and Ethereum. He did not have (either directly or indirectly) any positions in any other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.