The price of Dogecoin (CRYPTO:DOGE) has plummeted by nearly 40% since its peak in mid-May, the latest in the wild roller-coaster ride the cryptocurrency has been on since the beginning of the year.
Dogecoin originally started as a joke back in 2013, but it’s caused real waves in the investing world. Since the beginning of this year, Dogecoin’s price has soared by nearly 6,000%. Over the past 12 months, it’s up by more than 13,000%.
Cryptocurrency, in general, has experienced explosive growth over the past few months. But Dogecoin’s returns have been truly spectacular, outpacing those of even the biggest names in the industry, Bitcoin (CRYPTO:BTC) and Ethereum (CRYPTO:ETH). Bitcoin’s price is up by around 280% over the past 12 months, while Ethereum is up by around 950%.
In some cases, market downturns are a good opportunity to buy stocks when their prices are lower. With Dogecoin’s price falling to nearly half of what it was a month ago, is now the time to buy? Here’s what you need to know.
Research before you buy
With any investment, it’s important to do your research and make sure you’re as informed as possible before you buy.
It’s easy to let your emotions get the best of you and buy simply because an investment is “on sale.” This is especially true with an investment as volatile as Dogecoin.
The cryptocurrency experienced explosive growth essentially overnight, and it’s easy to fall into the trap of thinking that if you don’t buy right now, you may miss your opportunity. But rushing into an investment is never a good idea, and you may end up regretting your decision later.
If you’re considering investing in Dogecoin, think about the cryptocurrency’s fundamentals and whether it’s likely to experience long-term growth.
Cryptocurrency is highly speculative, which automatically makes Dogecoin a high-risk investment. While cryptocurrency could someday become mainstream, it’s just as likely that it will flop. There’s no guarantee that cryptocurrency will still be around five or 10 years from now, and Dogecoin can’t succeed if cryptocurrency is never widely accepted.
Even if cryptocurrency does thrive, that doesn’t necessarily mean Dogecoin will succeed as well. There are countless types of cryptocurrency out there, and Dogecoin is up against some stiff competition.
How does Dogecoin stack up?
In order for any investment to succeed over the long run, it needs a competitive advantage and real-world utility. Right now, Dogecoin lacks both.
Most cryptocurrencies lack real-world utility at the moment, because this form of currency is not widely accepted among merchants.
However, even among the companies that do accept cryptocurrency as a form of payment, most accept Bitcoin over Dogecoin. While that doesn’t necessarily mean that Dogecoin will never become widely accepted, it will need to work hard to catch up to Bitcoin.
Dogecoin supporters point to the fact that the…