- Elon Musk set off the Dogecoin (DOGE) phenomenon with some tweets.
- Just because something is widely available doesn’t make it valuable.
- There’s no real value in Dogecoin or any cryptocurrency.
After spending three years writing regularly about the space I soured on Dogecoin, indeed on all cryptocurrency. I wrote that Elon Musk wouldn’t save Doge, that he was treating investors as marks, and that there was no real value in it.
At the time of my June article, Dogecoin were selling at about 30 cents. Now it’s under 12 cents.
Get out now.
Searching for Fools
If you’re looking for news stories about Dogecoin, Bitcoin (BTC-USD) and other cryptos, you might be deceived.
A writer at The Motley Fool wrote “Why Dogecoin Is Soaring Today” on April 10. Another writer at Bitcoinist promises that Dogecoin has “more utility” because a popular WordPress plugin supports Doge now.
Here’s yet another. “Bitcoin Prices Rise and Dogecoin Soars.” That’s from Barron’s.
Even when Dogecoin falls, it’s because of something else that’s positive in the crypto world: “Investors Joined the New Leading Crypto Project.” If you stay on top of things, you’re certain to profit.
Dogecoin had a vogue in 2021. From less than 1 cent per coin, the price soared to a high of 73 cents per coin in May. That’s about the time I wrote the first of two negative articles.
So, did I magically transform Doge into dust overnight, using my magic keyboard? Uh, no.
That’s not how the market works. Markets are based on finding willing buyers and willing sellers. The Dogecoin rally started with Musk, CEO of Tesla (NASDAQ:TSLA), making some positive comments. The value of Dogecoin doesn’t really exist.
This is one reason why there’s so much consternation about Musk buying Twitter (NYSE:TWTR). If he can create the equivalent of a tulip mania with a few tweets, the thinking goes, imagine what he can do if he owns the platform.
I don’t share that fear. There are two reasons for that. First, I think credibility, once burned, is very hard to get back. Second, I think Musk is going to lose a lot of money on Twitter.
Dogecoin is an easy come, easy go, phony asset named for an internet meme. Musk has an easy come, easy go mega fortune backed by stock. Musk’s fortune has risen 10-fold in the last two years. It can easily be cut by the same percentage in the next two years, because Tesla isn’t worth more than the rest of its industry put together.
I don’t underestimate him. Elon Musk is very smart and sometimes works very hard. But he isn’t always reliable. At best, Musk today is like Henry Ford of Ford Motor (NYSE:F) in the early 1920s, on top of the world. (Ford didn’t end up there.) He lacks staying power.
The same is true for Dogecoin.
The Bottom Line on Dogecoin
The Dogecoin frenzy set off several, lesser gains in other fake currencies after its peak last May.
It also caused major institutions to join the rush into crypto. In 2022, it’s not unusual to see major media and TV coverage of cryptocurrencies. If Dogecoin wasn’t real, maybe Parody Coin (PARO-USD) is.
Or maybe not.
That should be your clue. Crypto is an easily manipulated, artificial asset whose price will collapse when the schemers find better things to do with their money. If you make money on crypto it’s because you’re lucky. But you must sell the asset to book your profit. You must find that greater fool.
Otherwise, you’ll end up with Dogecoin.
On the date of publication, Dana Blankenhorn held no positions in companies mentioned in this story. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.