Most investors would consider the cryptocurrency market volatile. In 2021, we saw many price swings from all the major cryptos, including Dogecoin (CCC:DOGE-USD).
While DOGE-USD has fallen out of the top 10 cryptocurrencies by market capitalization, it has still managed in 2022 to stay ahead of Shiba Inu (CCC:SHIB-USD), which sits in 13th spot at this writing.
However, as someone who considers himself a relative neophyte when it comes to cryptocurrencies, it appears as if Dogecoin’s volatility has seemingly disappeared.
Am I right to think this way, or is the coin’s current trading pattern the calm before the storm?
The Maturing of Dogecoin
Although DOGE-USD came to prevalence in 2021 – it went from $0.004636 at the end of 2020 to $0.6848 by early May, a return of 14,671% – it’s been around since 2013. As part of the coin’s coming out party this past year, Dogecoin experienced bouts of significant volatility.
On April 20, Dogecoin fans celebrated Dogeday, not ironically, held on the same day as International Weed Day. DOGE-USD gained more than 400% that week, valuing the coin at $52 billion and putting it in fifth place among the top cryptocurrencies.
Today, on a fully diluted basis, Dogecoin has a market cap of $22 billion, well down from those giddy times last April and May.
The idea behind Dogeday was to create so much interest in the meme coin that it would rocket through $1, making its owners very rich.
“‘As we saw with the GameStop frenzy earlier in the year, traders have once again adopted a game mentality, trying to propel the price higher using hashtags and rallying cries on internet forums,’ said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown,” Yahoo Finance reported at the time.
As I said at the beginning of this section, the Dogeday push carried DOGE-USD to almost 69 cents by May 6, providing two weeks of sheer exhilaration for long-time holders. But, unfortunately, by the end of May, it was down to 37 cents, a 46% drop in less than a month.
As the months passed, more volatility showed its face. However, considering that it took another seven months to lose an additional 46%, the volatility had slowed by early December.
And except for a brief surge in mid-January, when it hit 20 cents, the coin’s traded in a relatively tight range between 13 cents and 17 cents.
To me, that could be it’s a sign it’s maturing despite the general malaise for cryptocurrencies so far in 2022.
The Calm Before the Storm
InvestorPlace’s resident guru on cryptocurrencies, in my opinion, is Josh Enomoto. He was relatively early to the crypto game and remains invested in several cryptocurrencies, including DOGE-USD.
Despite Josh’s enthusiasm for the coin, he recently suggested that DOGE-USD needs more than a fanatical following from investors such as those on StockTwits. They continue to profess it will rocket to the moon despite no evidence to support this thesis.
Comparing it to religious fanaticism, Enomoto argues that the fanatic will lose when it comes to Dogecoin.
“Fanaticism benefits the few. By the looks of DOGE’s chart and the broader crypto space, there’s just not enough fanaticism for everyone to benefit, let alone a slight majority,” he wrote on Jan. 26.
“Therefore, with anything you hear on social media or the crypto community, you should automatically resort to skepticism. Take it from me: if you don’t have friends in church, you most certainly don’t have friends in whatever this is called.”
To put it another way, Enomoto suggests that owning Dogecoin is like playing musical chairs. At some point, you will be the odd person out, unable to secure a seat at the table, and you will lose your hard-earned capital as a result.
Another of my InvestorPlace colleagues, Alex Sirois, recently suggested that Dogecoin remains a cryptocurrency with very little utility other than for buying Tesla (NASDAQ:TSLA) merchandise.
I’ve often said that the cryptos that provide tangible utility are the ones that will likely become most valuable. I think Sirois would agree with me that Dogecoin does not appear to be one of the ultimate winners.
As such, May 2021 may turn out to be the meme coin’s finest hour.
The Bottom Line
The lack of volatility suggests there’s little in the way of speculative interest for Dogecoin at present. This means while you might not lose a lot betting on DOGE-USD in 2022, you might not make a whole lot, either.
Volatility works for and against investors. Presently, the lack of volatility is not good news if you own Dogecoin. Until it returns, you’re better off betting on another of the hundreds of cryptos available.
On the date of publication, Will Ashworth 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.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.
