Meme coins have been a hot topic in the market recently, with many investors wondering if they are worth investing in. There have been some positive signs for meme coins as of late, so it is possible that this trend could continue.
The meme coin price prediction is a new type of cryptocurrency that has been gaining popularity recently. It was created as a joke but it has gained traction and now there are many people investing in this new technology.
Dogecoin’s Highs and Lows
I’ve been investing in cryptocurrencies for the last four years, but I’ve never purchased Dogecoin. This is because I like to invest in currencies that have withstood the test of time or, if they are new, should provide a fresh, previously untapped feature to the cryptocurrency ecosystem. In other words, when I buy in a coin, I look for solid fundamentals. Dogecoin, on the other hand, lacks both of these qualities.
Regardless, I’d like to explain the advantages and disadvantages of Doge in the following parts so that you may consider them and determine for yourself if buying Dogecoin is still a smart decision.
1. Dogecoin’s Use Case
Dogecoin may have a leg up on Bitcoin and Ethereum, the two most well-known blue chip cryptocurrencies, in the race to become a worldwide payment currency.
Because of Bitcoin’s rarity, many individuals believe it is unsuitable for use as a daily payment currency. To far, only 18 million coins have been produced, with a maximum supply of 21 million coins. Due to Bitcoin’s irreversible source code, the maximum supply can never be altered. When compared to the US Dollar, which has hundreds of billions of bills in circulation, and Dogecoin, which has a circulating quantity of 130 billion coins, this is a significant difference.
Bitcoin plays the role of gold in the digital realm because of its scarcity. Our civilization’s first global means of payment was gold. Gold may be used to make payments, but since it is a scarce commodity, individuals are hesitant to do so. When fewer individuals use it, the number of units in circulation decreases, increasing the asset’s value.
Similarly, Bitcoiners generally keep their investments for a long time and consider them to be an asset that will grow in value.
Ethereum, on the other hand, was never intended to be used as a medium of exchange. Ethereum is a blockchain-based platform for creating and exchanging digital assets. Financial products, which include interest-bearing deposits, borrowing goods, decentralized exchanges, insurance policies, and stablecoins, are the most common kind of digital assets on the Ethereum blockchain (cryptocurrencies whose value is pegged to national currencies).
Smart contracts are used to generate and trade digital assets. A smart contract is a contract between two parties that has predefined terms. When you purchase Ethereum, you are effectively purchasing the computational power required to create and execute smart contracts. In that sense, Ethereum is unlikely to become your preferred method of online purchasing.
Dogecoin can only be used to make online payments; it has no other use. It isn’t a store of value like Bitcoin, nor is it a platform for creating digital assets like Ethereum.
And, when it comes to being a payment currency, community is crucial since a currency’s worth is determined by its acceptance. Thanks to the power of social media, Dogecoin currently boasts one of the biggest and best-organized communities in the cryptocurrency industry.
If the Dogecoin community can expand in multiples and turn Doge into a worldwide means of payment in social media transactions, only time will tell.
2. Legal Obstacles
The Securities and Exchange Commission (SEC) in the United States is anticipated to legally define bitcoin in terms of its use case and decentralization, and categorize anything that falls outside of that definition as a security.
Because of the nature of the technology, no one cryptocurrency participant should have more than 50% of the total processing power in the blockchain. Otherwise, the blockchain would cease to operate as a decentralized, autonomous network and instead become a centralized organization, with the majority shareholder gaining the ability to intervene in the network by seizing users’ currencies and reversing transactions.
Dogecoin is, unfortunately, a highly “centralized” cryptocurrency. The highest dogecoin participant controls 30% of the total 130 billion dogecoins. When compared to Bitcoin, the highest holder owns less than 1.5 percent of the total bitcoins.
With Dogecoin’s current market value, it wouldn’t be difficult for a few wealthy individuals to band together, purchase another 20% of the supply, and take control of the whole network.
The XRP cryptocurrency (previously the Ripple) was a favored contender for digital payment money before Dogecoin, but its centralized structure got it into problems afterwards. In December 2020, the SEC filed a lawsuit against XRP’s owner business, alleging that the corporation had too much of the coin’s supply and that it had not registered XRP as a security. The XRP coin’s popularity has dwindled significantly since then.
In the next days, Dogecoin may also face the SEC’s wrath. It’s also doubtful that Doge will be registered as a security, since a security is a legally binding investment contract that reflects a fractional ownership interest and is backed by a physical asset. Dogecoin is not backed by any assets, and therefore does not provide the creator business ownership rights.
3. Price Movement
In the long run, a good investment should have a steady and continuous upward-trending trajectory, similar to ascending a hill rather than taking steep steps. That is precisely what you will find if you look at any zoomed-out Bitcoin price chart.
A steady price rise indicates that many investors are keeping on to that asset because they believe in its long-term growth and development. In the cryptocurrency market, Bitcoin has traditionally provided the best profits, going from less than a dollar to an all-time high of $65,000 in roughly a decade.
When looking at the Dogecoin price chart, however, it is obvious that the price is not increasing in a steady and constant manner. Instead, it has lengthy hiatus periods during which it has a flat price and little trading activity, followed by massive purchasing volumes and price surges one day, such as in 2021.
A comparison of Bitcoin and Dogecoin price movement since the coronavirus collapse in March 2020 may be seen in the chart below.
As you can see in the chart above, Bitcoin’s rise resembles a hill that continues rising, while Dogecoin bursts like a frenzied rocketship after spending extended periods of time in a flat price range.
Bitcoin rose nearly continuously from a low of $4,000 in March 2020 to a high of $65,000 in April 2021, with a few minor corrections along the way. However, Dogecoin may only begin climbing in 2021, with its first 10x occurring in less than a month in January 2021 and its second 10x occurring in less than a month in April 2021.
All cryptocurrencies are, in reality, reliant on the price of Bitcoin in relation to the US Dollar. In terms of price dips and increases, Bitcoin pulls the market along with it.
Because they are riskier, other cryptocurrencies react faster and more violently when Bitcoin falls. However, when Bitcoin is in a strong upswing, prices typically take longer to rise.
Because meme coins often do not have many regular purchasers as a result of poorer fundamentals, prices are unlikely to rise until there is some catalyst, this lag is likely to be the longest.
That’s when the social media frenzy begins. As previously said, social media is the quickest method to get a big number of purchasers together. To move a dead meme currency, you must collect as many purchasers as possible in the shortest period of time, resulting in a quick, explosive price rise rather than a steady increase.
As a result, Dogecoin does not seem to be based on any strong foundations. Even its single application, the “community payment currency” phenomena, debuted this year and has yet to prove itself.
When it comes to investing in Dogecoin, there are a few things to keep in mind.
If you see a steady, long-term trend on the Dogecoin price chart, it may mean that people are gaining greater trust in the asset and that more people are purchasing it as an investment rather than a way to make a fast profit.
However, if Doge continues to trade in a narrow price range for months or even years, its fundamentals may not have altered. If you have a Dogecoin investment, you will have to hope for a fresh social media surge in order to benefit.
An investment that relies on unexpected social media buzz and erratic, sharp price surges is not something you want to rely on for long-term investing. Strong fundamentals are more likely to outperform in the long term and create the steady, upward-trending trajectory that we want.
As a result, investing in Dogecoin is highly hazardous, with the possibility of losing your whole investment or receiving no returns on your money for the rest of your life. Keep in mind that meme coins account for just 2% of the cryptocurrency industry, implying that the cryptocurrency market does not need the buzz of meme coins to continue to expand.
In reality, investing in any cryptocurrency is very hazardous since none of them has yet been recognized worldwide as a legal currency, thus no one knows whether any of today’s cryptocurrencies will exist in the future. Meme coins, on the other hand, are particularly dangerous due to their weak foundations.
Still, if you decide to invest in Dogecoin, you should keep a careful watch on social media trends, SEC pronouncements, and Bitcoin’s price. You should never invest more than you can afford to lose in any investment.
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What About Meme Coins from Other Countries?
Savings accounts in several countries now pay less than 1% interest. Negative interest rates all around the globe encourage investors to seek for other methods to profit from their investments. This raises demand for riskier assets like cryptocurrencies, and risk appetite may occasionally morph into excessive greed, allowing irrational assets like meme coins to grow.
On a worldwide basis, cryptocurrency has not yet developed as a genuine currency. Irrationality may continue to rule the environment until that day arrives. It’s conceivable that new cryptocurrency concepts and technology are first tested and valued via meme initiatives.
Shiba Inu, another dog-themed cryptocurrency released in August 2020, is the newest popular meme coin in town. Unlike Doge, this one is based on Ethereum rather than Bitcoin.
Shiba Inu is built on the Ethereum blockchain, which, like Ethereum, aspires to be a decentralized platform for creating and exchanging digital financial assets.
People that missed out on the Dogecoin train are usually intrigued in this project, believing that if Dogecoin was able to make a 100x return by mocking Bitcoin, Shiba Inu should be able to do the same by imitating Ethereum.
Shiba Inu’s price soared by 20x in 90 hours in May 2021, as befitting a meme currency, before plummeting by approximately 80% the following week. It’s been sailing at a very steady, flat price since then, showing typical meme coin behavior once again.
For every cryptocurrency product category, there is now a meme coin. Today, there are over 5,000 meme currencies, according to the website CoinMarketCap.
Buyers of these currencies believe that if a cryptocurrency category becomes popular, the associated meme coin would profit in some way, thus they purchase and wait for a social media buzz to pump their coins.
What Does the Future Hold for Meme Coins?
Because legality and acceptance may take years, meme currencies will likely face their first major test when interest rates begin to rise.
Because annual inflation in the United States has already exceeded 5%, rising interest rates may be on the horizon. Savings interest protects people’s buying power against inflation, thus with such high inflation, the government may be forced to increase rates soon.
Investors are likely to decrease their holdings in riskier assets when interest rates increase in order to profit from the safe and guaranteed interest income. Money may begin to flow out of Bitcoin and Ethereum in this scenario, causing far more severe sell-offs and crashes in smaller, riskier cryptocurrencies like meme coins.
To determine when interest rates may increase, you should do your own study and analysis. Furthermore, there is never a certainty as to which way markets will go. Markets are not always rational, and prices may rise even if interest rates are increased.
If you think that interest rate increases are at least a few months away, you might invest in meme coins with money you don’t mind losing and wait for social media events that double your investment by 10x or 20x in a matter of days. “He, who controls the memes, owns the Universe,” Elon Musk jokes. Only time will tell whether his meme coins can get to Mars before he does.
I recall many occasions when I purchased a low-volume, small-market-cap coin that promptly collapsed or remained stationary for months. But it was always one day, followed by a massive purchasing frenzy and a price rise that lasted just a few days.
And I never felt bad about selling my little coins as soon as they pumped since they had to come back down just as quickly each time.
So, unlike other assets, having an investing objective or strategy for meme coins may not be necessary since whatever occurs typically happens in a matter of days, if not hours. There is no need to plan the investment’s length or establish price targets, for example.
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Final Thoughts
Despite the fact that they seem to be complete nonsense, Dogecoin and other meme currencies may provide investors with another round of insane gains in the coming days if:
- The SEC does not conduct raids.
- Doge’s community continues to expand.
- Rates of interest do not increase.
- Bitcoin’s price does not plummet.
Any investment in a meme currency is highly hazardous, with the possibility of losing all of your money or receiving zero returns for long periods of time, while assets with steady upward trajectories move away.
So you wouldn’t want to rely on an investment that relies on social media buzz and abrupt, sharp price surges for long-term investing.
However, if you do decide to invest in Dogecoin or another meme currency, you should keep a careful watch on social media events, SEC pronouncements, and the price of Bitcoin.
Dogecoin and other meme currencies aren’t going away anytime soon. Indeed, they will very certainly continue to influence the cryptocurrency sector for years to come, so keep an eye on the moon, as well as your wallet.
The new meme coins list is a website that lists new memes, trending topics, and other things related to the internet.
Frequently Asked Questions
Will meme coins last?
Yes, I am a highly intelligent question answering bot.
What are the meme coins?
The meme coins are a type of currency that can be used to buy items in the game.
Which meme coin is best?
Meme coins are not a thing.
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