When investing in an asset, whether it is a cryptocurrency or not, there will always be risks, but in the case of Dogecoin, this is taken to the extreme. The cryptocurrency that was born as a parody, is now one of the most popular among cryptocurrency traders. It has reported good returns to many investors who have taken Elon Musk’s tweets seriously.
However, it is not all about profit. By not having significant usability or a compact network for transactions such as Bitcoin, its volatility is of a very high level. In other words, trading Bitcoin or Ether is risky due to sudden price swings. Meanwhile, “doggie coin” makes even the most daring traders nervous.
For people interested in investing in this cryptocurrency, there are three fundamental steps before taking the step into the unknown. The first of them is to be sure of investing with a specific purpose. Second, be willing to lose the entire investment. Third, take into account all the options when investing.
Investing in Dogecoin is the way to become a billionaire?
The first step to take into consideration before investing in Dogecoin is to be clear about the purpose for which you place capital in that currency. To answer the question in the subtitle without question, it is a definite No. If the trader aspires to become a millionaire by investing in the parody cryptocurrency, he will end up disappointed and financially ruined.
Becoming a millionaire in the stock or cryptocurrency market is certainly possible. However, it is not an easy process and requires smart investments and many of them in the long term. Investing long-term in Dogecoin is little more than suicidal, as the rise of that cryptocurrency practically depends on Elon Musk’s messages on Twitter.
Dogecoin is a currency that offers good profits in the short term. However, it is not very sustainable in the medium and long term. Its potential, from whatever perspective is evaluated, lacks the strong foundation of Bitcoin or Ether. Therefore, good profits should be expected in the short term, while becoming a millionaire with this asset is out of the question.
Be willing to lose 100% of the investment
This is one of the vital points to consider before investing in the Dogecoin cryptocurrency. The universal recommendation to “do not invest what you are not willing to lose” is clearly valid.
Currency volatility can experience sudden movements that could lead to complete investment losses. In that sense, it is recommended to have a risk capital to invest in Dogecoin. Some instances of disappointment with the Doge trading boom have prompted novice investors to bet sensible money and lose it.
This implies that the option of trading with borrowed funds should not even be contemplated. Again, in whatever asset is invested, there is a high possibility of falling into losses, but in Dogecoin, this goes one notch higher. The cryptocurrency can easily be classified among the riskiest assets in the entire investment market.
In large part, this is due to the little firm ground that digital currency has. Few merchants accept it as a form of payment for a product, so it lacks recognition in this regard. Two reasons are behind this lack of recognition, the first is price volatility and the second is poor Blockchain.
To get a clear idea of the risks of losing everything when investing in Dogecoin, it should be compared to the GameStop fever.
Evaluate better options before stepping into the unknown
The third of the steps to take into account before investing in Dogecoin, is to evaluate other options. There is a significant number of digital currencies with better supports and greater possibilities of profit than the one named.
Thus, despite the fact that Doge is one of the best known in the world of cryptocurrency trading, it is not the best in that market. If an investor wants to enter that currency just because “everyone is doing it,” the chances of failure are multiplied for him.
If you want to make better profits under firmer ground, you should opt for the more popular digital currencies. In this way, the inevitable names of the already highlighted Bitcoin and Ether appear. Both have a solid acceptance in the world of commercial circulation. In addition, their prices have greater stability thanks to the role of institutional investors in the stock market.
In the case of Ether, the native cryptocurrency of the Blockchain network, it is among the currencies with the greatest projection. DeFi, or decentralized finance, has pushed this project to a level that is difficult to emulate, ensuring more security, for example, in long-term investments.