Investing in Dogecoin carries some risks, so it’s important to increase your level of knowledge about the investment. This article will provide insight into what you need to know about the risks of investing in Dogecoin, so read on.
What Are The Disadvantages Of Investing In Dogecoin?
There are some disadvantages to holding dogecoin. But if you believe in the long-term benefits and want to invest in this cryptocurrency, it can still be a good investment.
There is also no guarantee that it will crash – many news outlets claim that all cryptocurrencies will go up in the future, which means that your Dogecoin could be worth a lot more than you think.
There are Questions Surrounding Leadership’s Belief in the Cryptocurrency
Although he’s been doing a lot of work to raise awareness for the cryptocurrency and help the economy, co-founder Billy Markus bought himself a Honda Civic and sold all his dogecoin.
Charlie Lee, the creator of Litecoin, did the same thing in December 2017. His decision to sell off his holdings released doubts about whether future innovation would happen with the token or not.
The issue with crypto is that it’s too centralized. A lot of people who should be making decisions about how to drive the value of this digital asset don’t do the work. There seems to be no reason for people to trust anyone if they can’t trust the coin’s developers themselves.
Dogecoin Relies On Its Fun Nature and Not Any Real Innovation
Investment stories across several financial news portals are focusing on the meme currency’s joke nature rather than any groundbreaking innovation. Understandably, DOGE was created to poke fun at other cryptocurrencies like Litecoin and Bitcoin.
With a saturated market comes a lot of innovation that can help with the adoption rate. With all the hype surrounding cryptocurrencies, there are lots of upgrades coming in terms of decentralization.
Unfortunately, it remains a joke as a result. Has been left to fend for itself as a transactional currency. Investment-wise, price is determined by how much fans want the crypto asset to trade for.
They also decide the price and time to dump the cryptocurrency for other coins. Which have strong fundamentals to back their price. This might cause dogecoin prices to dip, so consider it a sign to watch out for as it might not be a long-term investment.
Too Much Reliance on Elon Musk to Drive its Price
Before Elon Musk hosted Saturday Night Live, social media channels Facebook, Twitter, and Reddit were congested with what people thought he was going to say. Feeds were being spammed and a new investor was. An interest in Doge was found.
It can be difficult to stay up-to-date with the market for a particular cryptocurrency. This happens if there are too many messages about it in your feed within a short period.
Unfortunately, Elon Musk hosted the show and said dogecoin was a hustle. DOGE opened on Saturday, 8th May at $0.6878 with huge anticipation ahead of Elon Musk’s appearance on the comedy sketch show. They hit a day high of $0.7376 that same day. The stock closed at $0.6364 on the day.
In just 24 hours, Dogecoin had seen a drop in value by over 25% after Elon Musk called cryptocurrencies a “fraud” on Twitter. On Sunday, it opened at $0.6258 and fell to its day low at $0.4257 before closing the day at $0.5701.
Associated With Pump and Dump Schemes
Pumps & Dumps have been around for a long time and are heavily used in the crypto market. This hasn’t helped in regulating their influence because of its decentralized nature. Pumping is where a group of people purchase an item or service, sell it at a higher price, and then make double the money on lower stock.
There are a few factors that might affect how much you pay for an asset. One consideration is what price the initial buyer paid, and once that price has bounced around a bunch. The seller then releases it to other buyers who will then increase their demand. When this happens, they can rake in a chunk of cash by reselling or trading the asset.
It is expected that the value of dogecoin will go up. Because things like the many fad coins are seen as temporary. While dogecoin might last longer than some other cryptocurrencies. With traders and investors holding onto their assets for a long period, they make huge losses.
Make sure to check your holdings twice daily for any outgoing transactions so you don’t lose all your money.
Dogecoin Is Not the Number One Transactional Currency
Dogecoin is built on the basic layer of blockchain technology. Unlike other cryptocurrencies such as Tronix (TRX) and Ether (ETH), it has a primary function of sending & receiving money over the internet. DOGE has its blockchain that powers the network of this cryptocurrency. It is important to remember, however, that DOGE is only a digital currency.
The most popular transactional currencies are Bitcoin, Litecoin, Dash, and Bitcoin Cash. They are integrated into millions of merchants around the globe, including PayPal and Skrill.
DOGE is not as popular as it once was. So a run on the coin may be expected. However, this could provide other opportunities for growth and exploration.
Over-Reliance on the Price Patterns of Bitcoin
DOGE is a crypto asset that was released in 2014. With the rest of the crypto market. It has followed BTC and other altcoins since its inception and has seen many price increases since then.
DOGE has reached all-time highs numerous times due to these price patterns. If BTC should hit an unfavorable season due to strong regulation or a huge sell-off by long-term holders of digital gold, DOGE may plunge into new low lows.
Cryptocurrencies are becoming more popular as well, with the backing of a certain number of recent celebrities and fans. They provide a solution to the standard services provided by traditional markets, while also providing great products that are available at reasonable prices.
Infinitely Mineable
The fact that Bitcoin, Litecoin. Dash is a cap on a finite number and has been the reason for its increased value in recent years. Dogecoin doesn’t have a cap on the supply, so it might not perform as well in general.
Bitcoin was released and experienced intense demand since its release. Not long after, also known as the halving. Bitcoin was announced to have a unique supply of 21 million coins for everyone. The halving was when all the coins had been mined. The developers decided to add 5 billion coins to the maximum supply annually.
Millions of people around the world are enjoying the low-cost and high-speed transaction nature of DOGE, which made these coins popular among speculators and those looking to diversify their cryptocurrency portfolio.
After just 5 months, on May 29th, there was 1 out of every 20 people who had some DOGE stashed away in their wallet. The future of cryptocurrency is unknown because more traders enter the industry.
How to Invest in Dogecoin
There are several cryptocurrency exchanges and brokerages out there that can provide you with excellent solutions. Our brokerage of choice, eToro, introduced DOGE to its platform on May 3rd, 2021.
Etoro provides a trading platform that is easy to use and lets you manage your assets with peace of mind. Its security features ensure the safety of your coins.
The first step is to sign up for your account. You’ll need to provide some contact information like your full name, email, and address.
It’s important to avoid doing business with a fraudulent website. Make sure you fill out all required fields and research them thoroughly before proceeding.
When you fill out the form, you should try filling out one or more of the account verification forms we require. These include submitting a photo ID like your passport or driver’s license.
Upload your last paycheck stub, and complete a tax statement. The process of knowing your customer is important to most companies to prevent fraud, money laundering, and identity theft.