Things have been heating up in the crypto-currency market in recent weeks. Not only has bitcoin made gains, but so have many altcoins. Top of the list: Dogecoin (DOGE), which has reached a market capitalization of around US$50 billion.
This is not only due to “Doge Day”, the international Dogecoin holiday, which was set by the community on April 20, but above all to Elon Musk and other influencers who have once again publicized the meme currency. This can also be seen in the evolution of the Dogecoin price over the past few months: since the start of 2021, DOGE has seen an incredible 7,900% increase. This means that the meme project has dislodged some major crypto-currency projects and moved into fifth place among all crypto-currencies in terms of market capitalization.
Many investors are now wondering whether investing in Dogecoin still has potential, or whether the ship has sailed. First of all, after such a sharp rise in a short space of time, an equally sharp correction is becoming increasingly likely.
What is Dogecoin?
Dogecoin was created on December 8, 2013 as a fun crypto-currency and a parody of bitcoin. With the Japanese dog breed Shiba Inu as its mascot, Dogecoin became one of the most popular crypto-currencies in no time.
Back then, there was no way to create tokens on an existing blockchain with just a few clicks, as is currently the case with Ethereum. Each new crypto-currency had its own blockchain and followed different consensus mechanisms.
The number of DOGEs increases ad infinitum
Unlike Litecoin, Dogecoin creates a new block of 10,000 new DOGEs every minute. What’s more, there is no maximum number of coins in the ludic project. The limit was lifted by founder Jackson Palmer in February 2014, making it infinite. This fact alone makes Dogecoin extremely dangerous as an investment. In addition, around 14.4 million new DOGEs are created every day, further fueling the selling pressure.
In addition, around 70% of all dogecoins are held in a few different wallets. The concentration of large holders not only poses the risk of massive sales, but also controls much of the price movement. We still don’t know who’s behind these portfolios.
If these large investors decide to sell, this will inevitably lead to very strong selling pressure, which could bring the price of Dogecoin to its knees. That’s because DOGE currently lives and breathes marketing and greed for quick profits.
Dogecoin remains a fun project and solves no real problems. As a result, DOGE has no real purpose other than speculation. As soon as the first big investors, some of whom are sitting on gains of 1,000% or more, sell their shares, the situation will be tense for the rest of the investors.
The only hope then lies with Elon Musk and other influencers who could help Dogecoin gain renewed attention. If publicity fails, there will be no new money and the oversupply will be clearly visible. And it’s just a matter of time.
These lessons come from the last bull run of 2017. In a phase of high hype with lots of new investors who don’t have enough experience, the projects that make the most noise always win. Only in the bear market does the substance of the projects become apparent, which is almost non-existent in Dogecoin. At the latest here, investors should expect heavy losses with Dogecoin.
Dogecoin copies conquer Ethereum and Binance Smart Chain
The hype surrounding DOGE created such a buzz that some imitators decided to create copies of the legendary meme coin on Ethereum and the Binance Smart Chain (BSC). This led many investors who were unable to join Dogecoin to jump on one of the copies. Typically, the initiators of these tokens buy most of the total amount at a very low price in the beginning, pay various influencers and sell their tokens at a huge profit to newcomers who are not yet aware of their good fortune.
