Coinbase Global Inc (NASDAQ: COIN) is one of the largest and best known U.S. cryptocurrency exchanges. In conjunction with Coinbase’s first-quarter results in May, the company confirmed it will add Dogecoin (DOGE/USD) to its list of tradable assets.
Dogecoin was launched as a joke to mock cryptocurrencies in 2013, but over time it benefited from a loyal following. The price of one DOGE remained under a penny until this year and one would assume Coinbase’s announcement represents a clear catalyst for the price of Dogecoin.
2021 is year of the meme coins
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Dogecoin’s price traded as high as $0.75 (£0.53) on May 5th, although it fell under $0.51 shortly after. It is important to note that dogecoin has surged to more than $72.51 billion in terms of market cap, making it one of the most valuable cryptocurrencies around.
But since hitting the $0.75 mark, Dogecoin has had a downward spiral. This was an after-effect of Elon Musk’s show on “Saturday Night Live” where a character he played said Dogecoin is a “hustle.”
Regardless of theatrics, Dogecoin was created as a meme coin and is a joke that should not be taken seriously by anyone. Yet at the same time, this may not even matter.
Since the price of Dogecoin is so heavily influenced by Musk and the culture of users and supporters surrounding it, buyers have been willing to buy the recent dip.
So, is Dogecoin a stable investment? Far from it, in fact, it could potentially even be a lot more volatile than any other currency on the market due to its large size and joke status. In fact, it is inevitable for investors to wake up one day and see Dogecoin surge in value, only for it to tumble just as quickly.
Should you buy Dogecoin now?
At current levels, investors should only purchase DOGE/USD if they are in it for the “fun” factor. The fundamentals behind the coin aren’t as strong as other currencies, and the bubble could burst soon. After that, it is anyone’s best guess what would happen next. Perhaps DOGE will regain most if not all of its losses because a new billionaire said something funny about it.
Evaluating Dogecoin based on a near-term outlook is a bit more simple. One would expect the addition of DOGE on COIN to result in a buying frenzy as Coindesk users have access to buy Dogecoin for the first time ever.
Short-term traders looking to buy Dogecoin now ahead of a clear catalyst may want to consider selling part of their position if momentum takes it above $0.70 once trading debuts on Coinbase. If the bull charge continues, the next level to look out for is $1 at which point investors should certainly take their money off the table and move on to the next trade idea.
In the event that the price of Dogecoin tumbles after its Coinbase debut, investors should look to exit at $0.50. If the price falls to $0.40 which coincides with Thursday’s trading action level we could see the pace of selling accelerate with the coin retesting the $0.30 or even $0.20 levels.