If you think that Reddit’s influence over the financial markets just started in 2021, think again. Dogecoin started as a joke on Reddit back in 2013, long before tweets from Elon Musk and Snoop Dogg propelled the price higher.
Fast-forward to February of 2021, when Elon and Snoop posted a flurry of back-and-forth tweets that drove up the price of the dog-faced meme coin. Today, Dogecoin is among the top cryptocurrencies by market cap, sitting among the ranks of Bitcoin and Ethereum.
We can only imagine what cryptocurrency historians will make of early 2021 when they look back and see how the Dogecoin price increased by more than 600% in January, driven by the Reddit mania surrounding GameStop and other meme stocks.
Dogecoin traders have formed a culture that’s characterized by an irreverence for institutions like Wall Street. So, it makes perfect sense that Musk and Reddit users would gravitate towards Dogecoin.
In a way, Dogecoin has become a symbol of the “little guy” in the markets: the retail traders who, like Dogecoin itself, weren’t taken seriously by the mainstream media but are now making the headlines and seemingly moving the markets.
This leaves open the question of whether informed investors should buy Dogecoin now. Admittedly, it’s tempting to get caught up in the hype when you’ve got celebrities on your side and it feels like the market’s in celebration mode.
One thing that many folks who just recently jumped on the Dogecoin bandwagon probably don’t realize, however, is that Dogecoin doesn’t have a limit to the number of coins that can be produced in the system.
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This distinguishes Dogecoin from some other popular digital assets, such as Bitcoin. Importantly, only 21 million Bitcoins will ever be mined. This scarcity is, and always has been, one of Bitcoin’s most notable advantages in a time when fiat money inflation is a real concern.
There’s also the question of whether Dogecoin will actually gain acceptance as a means of wealth storage and payment transactions. For the time being, it seems that many people just want to trade Dogecoin for quick gains.
As I’m writing this, Coinbase stock is just now opening up to the public for trading. It is, by far, the most talked-about public offering I’ve seen recently.
Courtesy: Yahoo Finance
Probably because of the Coinbase stock debut, Dogecoin is rocketing past 13 cents, after having pushed past 10 cents for the first time just a few hours earlier.
On Twitter, predictions of $1 don’t even make an impression anymore. To really grab people’s attention (and get coveted likes and shares), you’d have to post a forecast of $10 at least.
I wouldn’t dare to call a top for Dogecoin at this point. Hype cycles can last for a surprisingly long time. As the old saying goes, the markets can remain irrational longer than you and I can remain solvent.
Perhaps the best strategy, if you feel a strong desire to get into Dogecoin, would be to at least wait for a pullback before taking a position.
We’ve seen drawdowns of 30%, 50%, and even more in Bitcoin and Ethereum. Buying those dips resulted in outstanding returns for gutsy and patient investors.
It’s possible to apply the same strategy with Dogecoin, which could be due for a retracement after its astounding bull run. Or, it could just keep going up in price. Apparently all of the traditional rules don’t apply anymore, and I’m pretty sure the Dogecoin community is okay with that.
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