Is DOGE a good cryptocurrency investment?
Dogecoin or DOGE is one of the most popular and meme-based investment opportunities out there. It received a lot of attention after the recent 1000% run in less than a month after the famous billionaire Elon Musk showed that he prefers Dogecoin over the leading cryptocurrency – Bitcoin.
In general, Dogecoin is nothing about the seriousness and all about adorable Shiba Inu breed dog which was largely known as Doge. But what if we look at it from an investment standpoint? How reasonable it would be to put some part of your saving into a volatile asset that might go for another 1000% run just because the community decided to do so.
Investment in cryptocurrency
In order to tell if Dogecoin is a good or a bad investment, you have to get familiar with the market nature of cryptocurrencies that are mostly being used as a speculation tool. In contrast to stocks or commodities, cryptocurrencies have one distinctive feature – volatility. Volatility is the changeability of the financial asset. For example, an average stock moves in the range of 10% per month while the average cryptocurrency can move in the 30 or even 50% range in the same timeframe.
This simple fact grants us a piece of very important knowledge about cryptocurrencies in general – it’s risky. If a financial asset can go up by 1000% in a month – it can go down by almost 100% in the same period of time. Almost exactly the same thing happened with Bitcoin after the mind-blowing bullrun back in 2017.
High volatility makes cryptocurrency an investment that won’t suit everyone since It’s highly irresponsible to take risks that the crypto market offers while being unprepared to lose all of your money. Dogecoin inherits all the characteristics of previous cryptocurrencies and is considered a volatile and high-risk investment opportunity hence shouldn’t be considered as the best way of profiting and saving money.
But here’s when you can invest in Dogecoin
Even though Dogecoin is not the safehaven asset that will save you from both the financial crisis and inflation, but it’s a great accumulation asset. Obviously, buying something that just jumped for 1000% is not the most reasonable investment decision. But if you wait until it retraces back to normal values and then start slowly buying it once in a while you will be able to accumulate a large amount of Dogecoins that you will possibly profit from once the next crypto bullrun starts.
In order to properly accumulate cryptocurrency assets, you should only buy in the periods when the market is largely oversold or rapidly moving down. In that case, you will be able to average your potential loss and profit greatly when the price recovers.
Important rules before investing in risky assets like DOGE
In order to invest properly you should also follow the next important rules:
Don’t trade or invest money that you are not ready to lose. Once you’ve entered a highly volatile market it’s important to understand that you may always lose money that you’ve invested in it since it’s highly unpredictable and not regulated by anyone or anything.
Don’t FOMO in (Fear Of Missing Out). It’s almost impossible to resits and not buy into a financial asset that gained more than 100% of its value but unfortunately, it is most likely to retrace before you will be able to take profit.
Don’t panic when the price goes down. If you’ve chosen accumulation as your go-to crypto investment strategy it is important to stay psychologically stable and do not close the entirety of your position after the slight price movement.
