Home Latest News Dogecoin: Bull vs. Bear – The Motley Fool

Dogecoin: Bull vs. Bear – The Motley Fool

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Motley Fool Issues Rare “All In” Buy Alert
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More
The meme-inspired cryptocurrency Dogecoin (DOGE 1.74%), whose mascot is the Shiba Inu dog breed, took the crypto investing world by storm earlier this year, running up from half a penny all the way to around $0.70 in May. Currently, Dogecoin, which has the 10th largest market cap of any cryptocurrency, is priced around $0.20. There has been much debate over whether Dogecoin is a legitimate investment. Let’s look at the bull and bear cases.
Adria Cimino: Dogecoin started as a joke. Co-founder Jackson Palmer tweeted about investing in the then-nonexistent Dogecoin to poke fun at the number of cryptos popping up here and there. When the idea of Dogecoin gathered momentum, though, Palmer decided to make the crypto a reality.
That was back in 2013. And since then, Dogecoin’s gains are no joke. Just this year, the coin has climbed more than 3,500%.
Image source: Getty Images.
So, why would someone invest in such a cryptocurrency? It’s important to note that it trades at well under a dollar a token. That means it’s easy to invest in this crypto player for only a few dollars, and if Dogecoin eventually declines, your losses would be extremely limited.
Now, let’s talk potential for gains. Considering the unlimited supply of Dogecoin, I don’t expect its value to reach extraordinary levels. But even if it makes it to a few dollars a share, many investors could win big.
Dogecoin doesn’t have the real-world utility of bigger competitors like Ethereum (ETH -2.74%) right now. But if it evolves into the realm of smart contracts (contracts that self-execute when certain conditions are met), it could become a significant player. Through these contracts, blockchains develop decentralized applications (dApps). These dApps are transforming how business is done in finance and other industries.
Dogecoin already has become the world’s 10th-biggest crypto by market cap. And that’s just through its popularity as a meme coin and as it’s gained some traction as a payment method. For example, the NBA basketball team the Dallas Mavericks accept Dogecoin. And most recently, AMC Entertainment Holdings said it will soon start accepting Dogecoin for payment.
Of course, Dogecoin remains very high-risk. It shouldn’t be the backbone of your crypto investment strategy. But it might find its place as a small part of a well-balanced crypto portfolio.
Bram Berkowitz: I admit that I got in on Dogecoin somewhat early in the run, but only put a little in for entertainment purposes and have already sold it. I never really considered Dogecoin to be a strong long-term investment because of the lack of fundamentals.
For one, Dogecoin seems to have only the very basic capabilities as a cryptocurrency in that it can help people move money on the internet without a bank account. But there are now more than 6,500 cryptocurrencies, and most of them can do this, too. There is no real-world utility for Dogecoin and no first-mover advantage, either.
The other thing is, there is no supply-and-demand dynamic associated with Dogecoin. People can mine an unlimited supply, and there is currently around $132 billion worth in circulation. One of the big reasons investors like Bitcoin (BTC 0.53%) is because they view it as a possible hedge against inflation, partly because the amount of tokens that can be mined is capped at 21 million, so there is a finite amount. And it was reported earlier this year that a very small amount of people own most of the market cap of Doge, making the token highly susceptible to volatility. 
Lastly, I really think Dogecoin benefited from the meme investing this year that also took hold of various other cryptocurrencies and stocks. Not long after Dogecoin’s impressive run, investors latched on to Shiba Inu (SHIB 0.05%), which seems to be a play on Dogecoin’s popularity given its name. Shiba Inu went on another parabolic run and is not too far behind Dogecoin’s market cap. It really seems like Shiba Inu has stolen Dogecoin’s fire for now, and I’m sure another digital token will come along and steal Shiba’s fire eventually. Dogecoin, in my opinion, is a short-term fad that is bound to fade.
Ultimately, it’s OK to invest a little money in Dogecoin for fun. It does have some notoriety at this point, and there’s always the chance that the next Elon Musk tweet about it could result in some nice quick gains.
But under no circumstances do we recommend dedicating anything over a very small amount of your crypto portfolio to Dogecoin. It’s likely to be highly volatile and lacks the fundamentals of a good cryptocurrency investment. 
Adria Cimino owns shares of Dogecoin and Ethereum. Bram Berkowitz owns shares of Bitcoin and Ethereum. The Motley Fool owns shares of and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Market-beating stocks from our award-winning analyst team.
Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/17/2022.
Discounted offers are only available to new members. Stock Advisor list price is $199 per year.
Calculated by Time-Weighted Return since 2002. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
Making the world smarter, happier, and richer.

Market data powered by Xignite.


Previous articleBitcoin is Fueling the Climate Crisis: Greenpeace USA – CryptoPotato
Next articleApple teases Apple Silicon Mac Pro at end of March event – 9to5Mac
He loves to share his thoughts via Internet. Associate writer at Inferse.com, his prime focus is to review latest cameras and smartphones. He is the official photographer at Inferse.