Surging over 48% since the start of the year, Dogecoin is once again in the spotlight. But does it belong there?
Dogecoin (DOGE -1.06%), the original "meme coin," has experienced a remarkable surge since the beginning of the year, with its price up by more than 48%. Earlier this week, it was up by 60%. This cryptocurrency, initially created as a farce, gained immense popularity during the last bull market, reaching a peak of over $0.70. However, despite its recent gains, Dogecoin's fundamentals remain questionable, if not entirely absent.
While Dogecoin has a loyal following that makes it similar to other prominent cryptocurrencies like Bitcoin or Ethereum, the meme coin differs significantly in that it lacks intrinsic value and meaningful utility. It was created as a parody of the burgeoning cryptocurrency space and continues to operate primarily as a meme-driven asset.
Even though its community is passionate, Dogecoin's technology and development are far from groundbreaking. For instance, consider that it has an unlimited supply. With no end in sight to the number of DOGE that will hit the market, it faces an uphill battle to maintain its value.
The simple truth is that as an investment, Dogecoin offers little beyond speculative potential. Its price fluctuations are largely driven by market sentiment, social media hype, and speculative trading activity. It isn't a common payment tool and deliberately didn't copy Bitcoin's anti-inflationary design. While some investors may see short-term gains during bullish periods, Dogecoin's lack of underlying value makes it inherently risky.
Although Dogecoin may continue to experience some price appreciation as speculative fervor builds amid a bull market, it is advisable for investors to be cautious when considering it as a part of their portfolio. Instead, they would be better off opting for safer and more proven options with robust fundamentals and clear utility.
Cryptocurrencies such as Bitcoin and Ethereum are two such options that easily fit these criteria. However, the cryptocurrency market is vast, and while most may be no better than Dogecoin in terms of speculation, there are some hidden gems out there that can give your portfolio a crypto-based boost.
RJ Fulton has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
