Instead, investors witnessed a stinging loss. Dogecoin prices fell 25% on lower-than-anticipated volume, erasing gains from the day before.
As investors consider their next move, people are starting to ask themselves, “Will DOGE prices rise again?” For an asset that moves on celebrity tweets, there’s little reason to expect a definitive answer. But for those looking for hints, here are three reasons why Dogecoin prices could rise again — and three reasons why they might not.
Reason #1 Why DOGE Prices May Rise Again: Greater Adoption
#DogeDay highlighted one fact: People are adopting Dogecoin. And that’s great news for DOGE prices.
The world of cryptocurrency works much like Betamax video and fax machines: Popular formats tend to dominate. A currency is valuable only if others accept it, so even technologically older cryptocurrencies like Bitcoin can remain winners.
Dogecoin’s 2021 rise has planted the seeds for similar success.
As Dogecoin’s profile has risen, developers and merchants have started paying attention. On Tuesday, Newegg and several other e-commerce sites began offering Dogecoin as a payment option. New trading platforms look to follow suit. These moves put Dogecoin on a winning track — as more people use the currency, there’s a greater chance that Dogecoin will survive rather than disappear.
Reason #2: Positive Momentum
In the long run, Dogecoin has proved remarkably resilient. Since 2014, drops of 15% or greater were followed by an average of an 11.3% return over the subsequent month. In other words, those buying the dip would have profited in the past.
The strategy, however, isn’t for the faint of heart. After losing 17% in a single day in September 2017, Dogecoin shed 43% more of its value. Past recoveries also never guarantee future successes.
Still, momentum remains one of the most potent predictors of cryptocurrency performance. Relatively speaking, Dogecoin’s 25% loss on Tuesday looks like a short-term buying opportunity rather than a complete reversal of fortunes.
Reason #3: People Like It
Even if #DogeDay didn’t send DOGE to $1, it still highlighted the coin’s “X-factor”: People like the coin. Never mind that DOGE remains a clone of Litecoin — a cryptocurrency that can trace its roots back to Bitcoin. The meme-coin’s fans don’t seem to care.
Today, Reddit’s r/Dogecoin subreddit counts almost 1.5 million subscribers, making it one of the most popular forums on the site. Celebrities like Elon Musk and made-up characters like Slim Jim regularly post tweets in support.
It’s hard to overstate the power of popularity. Wine lovers have long known that the best-tasting wines aren’t always the most expensive — a fact highlighted in the 1976 “Judgement of Paris” blind taste test that saw Californian wines beat better-known Bordeaux competitors.
Dogecoin, too, has harnessed that same power. Memes continue exploding on Twitter, gathering thousands of “likes” and convincing newer buyers to test the waters. If Dogecoin’s popularity continues rising, its $38 billion return since January might be the start.
Reason #1 Why DOGE Prices May Not Rise Again: Lagging Development
There are still reasons to be cautious.
Despite Dogecoin’s rise, the cryptocurrency has seen slight uptick in developer interest. In 2021, only four contributors have made any changes, most of them relatively minor. Meanwhile, currencies like Cardano have seen thousands of new commits.
A significant reason is that Dogecoin developers lack money. Cryptocurrencies like Cardano and Ethereum set aside funds early on from their initial coin offering (ICO), while Dogecoin developers work for free.
Dogecoin investors could turn the tables — the top-12 wallets share almost $20 billion worth of cryptocurrency. But until then, investors will have to hope that third-party developers will continue adding Dogecoin support regardless.
Reason #2: Size
Dogecoin started the year as a $600 million cryptocurrency, placing it among lesser-known coins like Lisk and Mdex. As Dogecoin has risen, however, its upside has decreased.
Today, Dogecoin doesn’t have the same one-sided potential for gains. Increasing another 65x (as it has since January) would make the coin worth $2.6 trillion, or more than all cryptocurrencies today. No current investor will repeat the winnings of early DOGE investors.
Reason #3: Competition
As Dogecoin has risen, alternative meme coins have quickly gained traction. SafeMoon, a coin launched less than a month ago, has quickly dethroned Dogecoin as the internet’s most searched coin. Others like PirateChain have seen even faster gains, rising nearly 200% in a week.
These newer coins may pose a growing problem for Dogecoin. As trading platforms continue adding altcoins, Dogecoin fans could find it harder to keep garnering attention.
Conclusion: Should You Buy the Dogecoin Dip?
Dogecoin fans have long focused on memes over development. And DOGE’s largest holders haven’t helped much either.
But those looking for their first taste of cryptocurrency could do well to buy a couple of hundred dollars of Dogecoin and join the community. Because as investors will quickly learn, Dogecoin has never been about getting rich — most investors are small-time holders. Instead, the meme coin has arguably been about having fun and making some money in the process.
Dogecoin might yet reach $1. Just don’t take the joy out of it by betting your house.
Source: Fintechs.fi – Fintech News