The crypto market has been hot in the past few weeks. Not only Bitcoin was able to gain, but also many Altcoins. Right at the forefront: Dogecoin (DOGE), which was able to achieve a market capitalization of around 50 billion US dollars. In case you want a different way of earning money than playing in a casino, then maybe you should consider investing in these fun currencies.
This is not only due to “Doge Day”, the international Dogecoin holiday, which was set by the community on April 20th, but above all to Elon Musk and other influencers who once again raised the drum for the Meme-Coin. This can also be seen in the Dogecoin price trend over the past few months: Since the beginning of 2021, DOGE has increased by an unbelievable 7,900 percent. The meme project has thus displaced some large crypto projects and placed fifth among all cryptocurrencies by market capitalization. Many investors are now wondering whether an investment in Dogecoin still has potential or whether the train has left. First of all: After such a strong increase in a very short time, an equally strong correction becomes more and more likely. Like Litecoin, Dogecoin uses the Proof-of-Work (PoW) algorithm and does not differ significantly from Bitcoin here. At DOGE, too, miners are looking for new blocks and using them to process outstanding transactions in the network.
The number of DOGE is increasing ad infinitum
In contrast to Litecoin, Dogecoin creates a new block with 10,000 new DOGE every minute. In addition, there is no maximum number of coins in the fun project. The limit was lifted by founder Jackson Palmer in February 2014 and is therefore infinite. This fact alone makes Dogecoin extremely unsafe as an investment. In addition, around 14.4 million new DOGE are created every day, which further increases the pressure to sell.
11 Dogecoin portfolios own 70 percent of the supply
In addition, around 70 percent of all Dogecoin are in just a few different wallets. The concentration of large holders not only harbors the risk of strong sales but also largely controls price developments. Who is behind these wallets remains unclear. If these big investors decide to sell, then this will inevitably lead to very strong selling pressure, which may bring the Dogecoin course to its knees. Because currently, DOGE lives exclusively from marketing and greed for quick profits. Dogecoin is still a fun project and doesn’t really solve a problem. Ergo, DOGE has no real use except speculation. As soon as the first large investors, some of whom are sitting on profits of more than 1,000 percent or more, sell-off, things get tight for the rest of the investors.
Without Elon Musk and Co, it looks bleak
The only hope then lies in Elon Musk and other influencers who could help Dogecoin to attract renewed attention. If there is no advertising, no more fresh money comes in and the excess supply becomes clearly visible. And that is just a matter of time. These findings come from the last bull run in 2017. In a strong hype phase with many new investors who do not have enough experience, the projects that are loudest always win. It is only in the bear market that the substance of the projects becomes apparent, which Dogecoin hardly or not at all has. At this point at the latest, investors must expect heavy losses in Dogecoin.
Dogecoin copies conquer Ethereum and Binance Smart Chain
The hype surrounding DOGE has caused so much fuss that some free riders have decided to create copies of the legendary Meme-Coin on Ethereum and the Binance Smart Chain (BSC). As a result, many investors who missed out on joining Dogecoin jumped on one of the copies. As a rule, the initiators of these tokens buy the majority of the total amount very cheaply at the beginning, pay various influencers and sell their tokens with an enormous profit to the newcomers who do not yet know about their luck.
These scenarios repeat themselves over and over again. Yesterday it was NFT, today it is dog memes, and tomorrow maybe something completely different. The gamble on the crypto market is not giving up. The greed for quick money makes the most absurd projects profitable that most can only dream of. But the other side of the coin looks less rosy. The hype surrounding such projects is short-lived. At some point, the early investors will realize their profits and drive the price down. This has been shown many times in the past and will very likely not be any different this time.
Bitcoin2Go says: Dogecoin is a fun crypto project that has been around for many years and has a strong community behind it. Nevertheless, DOGE is not a long-term investment. The coin does not serve a real purpose. In addition, there is no limit to the maximum amount. We therefore urgently advise all investors, and especially newcomers, against investing in fun cryptocurrencies. They live exclusively from marketing and influencers, who usually benefit the most from it themselves. Such hype is short-lived and often leads to a total loss in the end.
If you are looking to get started with cryptocurrencies, you should first deal with the largest and most important cryptocurrency. Only when you understand Bitcoin does the difference to all other cryptocurrencies become clear. First of all, invest in yourself and acquire the knowledge you need to be successful in the crypto market. Never invest in something that you do not understand and cannot classify yourself.