Is Dogecoin worth the hype?
Dogecoin is a digital currency created by software engineers in 2013. It was designed to work as a medium of exchange whereby people make instant and free transactions, unlike transactions in the traditional banking system. Dogecoin's creators claim to have started this whole project for fun and with no clear objectives. The symbol of the coin originated from the face of the Shiba Inu dog, initially derived from a dog meme. After developing a huge online community, its market capitalization reached $5,382,875,000 in 2021.
Tokens and cryptocurrencies that are not Bitcoin are also known as alternative cryptocurrencies, or Altcoins. Dogecoin is among these altcoins that gained significant momentum and volume in 2021. It is based on Luckycoin, which in fact is also based on Litecoin. Dogecoin increased by a 540% in value on a year-to-date basis, and a 1070% gain from its all-time highs in mid-February 2021. The huge volume and increase in price came in after Elon Musk offered help to make Dogecoin become the "currency of the internet". Another reason for this significant rally was the huge reddit buying frenzy on the coin, rendering it equivalent to the GameStop buying craze. Dogecoin had an initial supply count of 100 billion coins in circulation. In 2015, the creators of the coin agreed to add 5 billion coins into the market every year. This was done to create a reduced inflation rate as time goes by, which adds a unique attribute to the value of the coin itself.
After the wild surge in most cryptocurrencies and especially Dogecoin's significant uptrend, investors are asking if this cryptocurrency is worth adding to their portfolio. The current value of the coin lies in the strong community that built this coin, and in the expectation that altcoins will continue their upward bull momentum as banks and economies are starting to evaluate the feasibility of replacing paper money with a digital currency. If digital assets continue to show more demand from traders, Dogecoin will surely be amongst the top gainers due to its popularity and value. The main component that separates this coin from most cryptocurrencies is that it is an inflationary asset, meaning that there is no limit to the number of coins in circulation. This feature was also designed to help replace lost coins and keep a stable market. This attribute makes Dogecoin looks promising as other cryptocurrencies with hard supply may no longer be profitable for miners, because the system will not be as feasible and sustainable as it once was due to the higher fees and very long transaction times. If miners start to abandon a coin and show no significant demand, a loss in value will be inevitable; however, this is not the case with Dogecoin.
From a technical perspective, Dogecoin is currently trading on its 50% Fibonacci retracement level and bouncing off a major support zone. If more volume and demand come into play, traders expect a surge to the $0.1130 level, which is an approximate 130% gain from the current $0.05 price level. A buy entry at $0.05 with a tight stop placed at a level below the support at $0.0408, and a profit taking target at $0.1130 is no doubt a worthy investment; as this trade harvests a 1:8 risk to reward ratio with a relatively probable outcome.
By historical standards, Dogecoin is a great investment. Cryptocurrencies are the top performing asset class of the past decade, appreciating by thousands of percentage points. Can these altcoins maintain this exponential growth? Potentially yes, on condition that investors will always have an appetite for risk, and that digital assets will replace traditional investment vehicles.
This article was submitted by Royal.
