Tesla Motors (TSLA) - Opinion: The Doge Days Are Over. You Invested in Dogecoin, Now What?

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This column does not necessarily reflect the opinion of the editorial board of Benzinga.

Everybody familiar with traditional investing knows that penny stocks are rife with fraud and scams.

Still, with the recent attention on cryptocurrencies because of the tremendous growth of Bitcoin and the social-media interest in Dogecoin, it is worth a quick lesson on how we can define the value of cryptocurrencies.

Doge and Bitcoin are easy ways to come into cryptoland but don’t expect these assets to not move under your feet like a massive earthquake as the entire industry is still in its early days.

I am a Founder and CEO of a crypto company that helps Crypto users HODL their assets, earn interest and take out loans.

Still, even as much as we like the attention and growth that these moments bring, we also need to be careful to educate new users on assets' risks with little to no value or utility.

Instead, if you are reading this because Dogecoin got you interested in digital assets' investment potential, let me help you understand how to determine value through use cases, teams, and more.

Trust me. There are coins in this industry that are just a meme-worthy as Doge, without the same risk.

Why is Dogecoin so popular?

The simplest answer is it has been around since 2014 and went MOON thanks to Elon Musk.

The Tesla CEO has taken a liking of the coin for no particular reason.

It all began on January 28, when he tweeted a cover of “Dogue” magazine. Ever since he has been consistently provoking investors of all types to rush into the coin, this coincided with the events of the Reddit group Wall Street Bets' monumental Gamestop (GME) surge.

People were more tuned in than ever before to running with an investment trend straight from the internet.

Dogecoin is no stranger to being the benefactor of a trend, as it had just been the subject of a TikTok challenge in July 2020.

Why shouldn’t we invest?

I cannot give anyone investment advice, but what I can say is that there are over 15,000 projects in crypto, so one should do some homework before selecting what’s worth big followings time is, money, and effort to invest into that having a coin like Doge be the third most talked about asset in our industry feels too similar to the problems we had with illegitimate projects in 2017.

Jackson Palmer and Billy Markus created Dogecoin at the end of 2013 as a fork (copy) of Litecoin (itself a copy of Bitcoin) and an insider joke.

As an industry, there is no need to hype up a meme for attention anymore– we have real value that nobody can rival.

Don’t worry; there are memes worth investing in!

I get that one of the appeals of crypto is the punk-rock attitude mixed with the culture of trolling and memes.

I’ve been at the receiving end of some great ones myself. If the appeal of holding onto a currency that not only makes you money but fits your sense of humor is something you prioritize, I’ve split these groups up into Memes, Low Cost, and Fun projects.

Meme-worthiness: I assure you that the Decentralized Finance (“DeFi”) segment of crypto is in no short supply of quality projects that have solid fundamentals, great teams, and real use cases behind them and can offer you the same level of meme value as Doge. Projects like UniSwap, Compound, and AAVE all offer value that extends beyond great branding.

Low-cost coins: Dogecoin pumping from fractions to a whole dollar is an appealing concept, and, for many, it feels a lot more possible to invest into with some real weight compared to a Bitcoin that is currently above $50,000.

However, the idea of a crypto project growing 100x is not exclusive to Doge (which has over 128 billion coins in circulation, that is 16 Dogecoin for every human on the planet), nor is it that rare.

Cardano, Algorand, Polkadot, Binance Coin, and CEL tokens have all seen huge profits for investors in just the last year.

New projects are developing right now with real potential to pump from nothing to a dollar and then to the moon.

Fun: If your intention is to have fun and explore the exciting sub-plots in the larger world of crypto, then there are so many projects that can give you that experience while also giving you the value add of usefulness and resource.

Projects like my company that offer high yield on your cryptocurrencies paid out weekly, NFTs like NBA Top Shot that let you own the great moments in basketball, and apps like MyEtherWallet you access hundreds of fun projects right from your mobile phone.

Crypto has come a long way since the early days of useless coins that can be pumped and dumped on unsuspecting newcomers.

The doge days come and go, and there are real horses (nay, unicorns) running through the crypto landscape of 2021.

Today, it is a place of exciting, vibrant projects that offer new financial independence and ownership to the investors themselves.

It is a place that believes in accountability, anonymity, and the occasional asinine project name.

But ultimately, if you have found yourself interested in cryptocurrency because of Dogecoin, I urge you to keep going because beyond the hype, there is a real revolution happening, and we’d love for you to be a part of it all.

By Alex Mashinsky, CEO and Founder of Celsius Network

Inflation and Influencers: How Investors Can Send Dogecoin to $10

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So much wow. When Billy Markus created Dogecoin (CCC:DOGE-USD) in 2013, he did so as a joke. DOGE’s mining reward system was so ludicrously structured that no one could possibly have taken it seriously; at the start, miners could earn anywhere from zero to 1 billion coins for completing a single block.

Dogecoin Cryptocurrency

Source: Orpheus FX / Shutterstock.com

But Dogecoin holders have had the last laugh. Today, the cryptocurrency is worth almost $10 billion and has one of the most dedicated followings of any tradable security. Lucky investors could have turned a $1,000 initial stake into nearly $1 million.

Core to this success was a 2014 technical change that developers quietly made, although celebrity endorsements helped. At block 145,000 – the coin switched from its random mining reward to a consistent payout; miners now earn just 10,000 DOGE per reward. That move capped today’s inflation at 5.256 billion coins per year and removes the joke that initially made the cryptocurrency unusable.

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Renewed interest in Dogecoin’s development could spark even more changes. If its inflation trajectory changes again, DOGE at $10 might become a reality.

Why Are DOGE Prices Stuck Around 6 Cents?

Cryptocurrencies typically fall into three groups:

Inflationary: a supply that goes up indefinitely (i.e., Dogecoin)

Deflationary: a limited supply (i.e., Bitcoin)

Pegged: a supply that changes to match USD or another underlying asset (i.e., Tether)

Today, Dogecoin lives life as an inflationary coin. Much like fiat currencies, more gets minted every day. And just like its government-backed counterparts, Doge’s upside remains limited because buyers know they can always acquire more later. (For a real-world example, consider that the EUR/USD exchange rate of 1.2 is virtually the same as in 1999). In other words, when your currency adds 4% supply every year, it will eventually find a price equilibrium with other 4% growth currencies.

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Meanwhile, Bitcoin (CCC:BTC-USD) and fellow limited-supply coins can often see their value rise astronomically. Much like Picassos, vintage wines and 1868-collectible stamps, their limited availability means each minted piece becomes more valuable with each passing day.

DOGE Price to $1? Or $10?

Even without inflationary changes, the price could still hit $1. The cryptocurrency has 130 billion coins outstanding; a $1 price-per-coin will still leave it 55% the size of Ethereum (CCC:ETH-USD), the world’s second-largest crypto. And because only the marginal trade matters in asset pricing, even a few major account owners could theoretically send values soaring.

With some luck, the coin might even stay at $1. With renewed interest in the Shiba-Inu-fronted coin, developers have since jumped back into its code repository, proposing crucial usability and speed improvements. Developers have pushed major changes before – DigiByte and Litecoin (CCC:LTC-USD) snippets features prominently in Dogecoin’s source code. More may be on the way.

Inflation will also become a minor issue over time – the outcome of a flat reward divided by a growing capital base. By 2040, Dogecoin’s inflation rate would have dropped to just 2.4%, or roughly the same as U.S. dollars today. By 2060, it would be 1.6%, making it deflationary relative to dollars.

dogecoin supply and inflation

Source: Author Calculations

However, sending Dogecoin to $10 will require an even more significant change: a switch to a deflationary system sooner than 2060.

Dogecoin’s 10,000 Rule

Currently, miners earn 10,000 DOGE per block, which happens about once per minute. That puts a $10 price target firmly out of reach; no matter how many people buy Dogecoin, its ever-growing supply makes price gains an uphill battle. A $10 price means Dogecoin needs to surpass Bitcoin in market capitalization and stay there.

But in open-source cryptocurrencies, no rule is permanent. With enough core contributors voting for change, even projects as large as Ethereum can alter its fundamental building blocks to keep up with newer coins.

Today, Dogecoin finds itself at the same crossroads. Its codebase is rapidly aging, and newer coins like Cardano (CCC:ADA-USD) and Polkadot (CCC:DOT-USD) are nipping at its heels. Even Bitcoin looks vulnerable to third-generation coins that can perform transactions far faster and cheaper.

So far, Dogecoin’s grassroots-based approach has helped the cryptocurrency avoid obsolescence; people buy the coin for fun and profits, not usability. But unless larger stakeholders also step up, these efforts can only go so far.

The Dogecoin Whale

Ordinarily, prominent crypto stakeholders will help fund code and business development. The Cardano Network, for instance, has three official organizations to manage standardization, technology and developer support. Together, they share around billions in funding. Ripple Labs has a similarly large budget for promoting XRP (CCC:XRP-USD).

Meanwhile, DOGE relies on 200 part-time coders and a legion of online fans for support. Many look like core contributor Ross Nicoll – working for free to maintain an ever-growing system. It’s why much of its code gets lifted from other coins: there are simply not enough resources to develop proprietary code. Others are like the thousands of social media followers on Dogecoin; many constantly hound the developers to cap the currency’s supply.

If investors want to send Dogecoin prices to $10, far more is needed than buying the coin and posting tweets. It needs a benefactor to help fund improvements.

Already, the coin has some big-name backers. On Thursday, Elon Musk promised to literally send the coin to the moon on a SpaceX rocket. He could make an even bigger impact by starting a “Dogecoin Foundation” to fund development and promote adoption among startups and enterprises. So far he’s avoided that, blaming the “Dogecoin Whale“. Regular investors can help by contributing, rather than hounding developers.

Dogecoin to $10 is more than a dream – it’s a possibility that’s just around the corner if the community one day bands together.

On the date of publication, Tom Yeung did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Tom Yeung, CFA, is a registered investment advisor on a mission to bring simplicity to the world of investing.

Dogecoin Price Prediction: Is DOGE Set to Consolidate for Longer?

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The Dogecoin price has lost momentum. A few days after the digital currency rallied by more than 30% to $0.0698, the coin has retreated and is trading at $0.0585. Its market cap has dropped $7.59 billion, according to data compiled by CoinMarketCap. Its ranking has also dropped substantially from an all-time high of 7 to 20.

What happened: Altcoins have done reasonably well recently, helped by the strong performance of Bitcoin and Ether. Some popular coins like Polkadot, Stellar Lumens, and XRP have rallied by more than 20% in the past seven days. Dogecoin, on the other hand, has struggled as the hype surrounding the meme coin fades. Indeed, a look at the recent Google Trends shows that fewer people are searching for the coin.

Also, its mentions in social media has faded. Elon Musk, its biggest evangelist has not tweeted about it for a while. This, coupled with the fact that very few stores accept the currency, has seen more traders avoid the coin.

Dogecoin price prediction

The four-hour chart shows that the DOGE price has been in a tight range since February when its hype started. In this period, except on rare occasions, the price has remained between the support and resistance levels at $0.052 and $0.063. This price is also slightly above the 50% Fibonacci retracement level and slightly above the 25-day moving average. Its volatility has also waned.

Therefore, in my view, the Dogecoin price will remain at this range as traders wait for a catalyst. In this period, the key levels to watch will be the support and resistance levels mentioned above.

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DOGE Price Chart

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