Down about 6% year-to-date (YTD), now may look like a great time to dive into Dogecoin (CCC:DOGE-USD) to some investors. In the near term, the U.S. Federal Reserve’s upcoming interest rate hikes could keep putting pressure on the crypto market. However, once this headwind subsides, the popular coin — which went from a joke to serious business in 2021 — could zoom back to higher prices.
Or can it? Sure, higher-quality cryptos stand to resume their upward move in value, assuming investors soon absorb a return to normal for the Fed’s interest rate policy. Bitcoin (CCC:BTC-USD) could bounce back to its all-time high as it sees a resurgence in popularity among institutional investors. Ethereum (CCC:ETH-USD) and its top would-be “killers” like Cardano (CCC:ADA-USD) could bounce back as well. Increased usage of either blockchain will enable their respective coins to continue appreciating over time.
However, I wouldn’t include DOGE in that basket. It may be in a better place than copycats like Shiba Inu (CCC:SHIB-USD). Yet, when it comes to upgrades, Dogecoin is mostly talk and little action. Until DOGE proves its on the path to become one of the more promising altcoins, it’s best for investors to skip out.
The Latest with Dogecoin
So far this month, news that Tesla (NASDAQ:TSLA) is starting to accept DOGE payments for certain merchandise has helped counter the rate-hike pressures that have moved cryptos lower since Jan 1.
Like I’ve discussed before, Tesla CEO Elon Musk is still one of the key factors keeping Dogecoin in the spotlight. The coin continues to make big moves based on the tweets, comments and actions of the tech impresario. This association with Musk has been (and continues to be) a positive for the coin. In fact, it’s one of the reasons why DOGE has managed to still find a floor between 15 and 20 cents.
A few tweets and the payment-acceptance action can help it stay steady. Yet, this alone will not move DOGE higher in a meaningful way. That won’t happen until the blockchain improves its utility and starts becoming a more widely used platform for applications. Then the coin can start to truly bounce back in price.
That’s not to say DOGE will just tread water from here. It may see a temporary jump in price a few more times in the near term. This may be good news for short-term traders. But that does not make Dogecoin a stronger long-term opportunity.
DOGE Versus Other Altcoins
It’s unclear when the market will fully absorb changes in interest rates. However, whether that has already happened or happens down the road, it’s questionable whether Dogecoin is a crypto to buy ahead of a recovery for the asset class.
Yes, like I hinted above, there may be a path for DOGE to spike once or twice — and not because of Elon Musk. As The Daily Hodl recently reported, hype surrounding two upcoming launches could help send the coin temporarily higher. First, there’s the launch of GigaWallet, a service that will enable more merchants to accept DOGE-USD for payment. Additionally, a new software developer kit may spark more developer activity within the DOGE ecosystem.
However, neither of these potential catalysts makes the coin a stronger long-term buy. Maybe I sound like a broken record, but that will not happen until its blockchain is revamped to be more like Ethereum, Cardano, or Solana (CCC:SOL-USD).
Outside of that, there’s limited upside. Barring another round of pupcoin mania, investors on the sidelines will likely opt for the higher-utility cryptos, if or when they decide to reenter the space. That’s promising news for BTC, ETH, ADA and others, which have beaten down since late last year. But it’s bad news, of course, for investors buying Dogecoin.
Consider DOGE the ‘Show Me’ Coin
The same happens with stocks; when it comes to some names, there are times you can call “show me” situations. That principle applies here. Hardcore fans will remain loyal to this coin. They’ll use DOGE for payments. They may also take advantage of the opportunity to stake it, which has recently opened up.
But when it comes to other investors? They’ll continue to sit this one out. The market will only warm back up to DOGE once it shows that it’s making progress on utility.
If you’re getting back into crypto today, there are many better options out there on sale. Altcoins like Ethereum and Cardano, for instance, have far greater potential. In the meantime, though, there’s no need to bother with Dogecoin.
On the date of publication, Thomas Niel held long positions in Bitcoin and Ethereum. 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.
