Dogecoin: Why is it doing so well? Is there a downside?
Does Dogecoin have what it takes to become a solid investment for the long haul? One expert suggests the hype might be real, but could still end in tears.
Antony Portno, founder of Traders of Crypto, a website dedicated to cryptocurrency information, said in a statement to the Deseret News that Dogecoin’s success and rise to viral fame remains a major mystery.
“On face value, it is a complete mystery as to why Dogecoin continues to grow, it is a meme coin, with bad tockenomics and no development. We all know the world of crypto is in equal measure, crazy and fickle,” he said.
But Portno pointed to social media as a key source of Dogecoin growth. Like so many other experts have said, Dogecoin has grown because of mentions by Dallas Mavericks owner Mark Cuban and Tesla CEO Elon Musk. These celebrities often bring up the social media-inspired meme and it just continues to grow from there. Dogecoin benefits when so many people talk about it encouraging people to invest in it.
From there, people focus on Dogecoin because its value is rising. People want to invest in something that they know is doing well, he said. It’s a cycle. People talk about Dogecoin so they invest. And people then invest more in Dogecoin because people are talking about it.
Still, questions remain about its potential staying power. What happens if so many people withdraw their holdings? What happens if media companies start covering the rise of Dogecoin and celebrities like Cuban and Musk stop talking about it? Dogecoin existed for years before it rose to fame. There’s another timeline where people stop talking about Dogecoin and it becomes less valuable.
So does Portno see Dogecoin rising to $1 in value like so many investors want? Since the beginning of the recent rise, there has been speculation that Dogecoin — once worth as little as $0.0023 per dogecoin — could spike to $1. It reached close to $0.70 this week, so $1 isn’t totally out of the picture.
“There has been much talk about getting Doge to $1, and whilst it has seemed like an impossible dream for a while, things are starting to pull in the right direction,” Portno said in an email to the Deseret News. “Right now, it only needs another 50% gain to get there. The way the market works, the price is only about the last trade and if the sellers hold back and the momentum is up, what’s to stop it?”
Then again, Portno said he recognizes that Dogecoin could take a turn for the worst and all of the hype could “end in tears.” Plenty of experts see Dogecoin as something akin to gambling. People are investing with their belief that the cryptocurrency will hold its value. Many others are talking about it right now because they know Musk will appear on “Saturday Night Live” and will likely mention the cryptocurrency, which investors believe will make the value soar. So it’s all a waiting game.
Legendary Warren Buffett recently hinted at this idea. He pointed to stock-trading apps like Robinhood — which also allows for people to buy and trade cryptocurrency — as examples of turning the stock market into something close to online casino gambling.
“There’s nothing illegal about it, there’s nothing immoral but I don’t think you’d build a society around people doing it,” said Buffett.
He added, “The degree to which a very rich society can reward people who now know how to take advantage essentially of the gambling instincts of not only the American public but the worldwide public, it’s not the most admirable part of the accomplishment.”
Portno doesn’t have a problem with people investing — as long as they’re doing it right.
“As long as you are investing sensibly then it should be a fun ride,” he said.