Has Elon Musk Invested In Dogecoin

Be it any asset course in the world, I have e’er followed the value investing approach. In the world of meme coins and meme stocks, value investors seem to be scrap out of place. I do agree that investment strategies need to be dynamic. However, I am however struggling to observe a good reason to consider exposure to meme coins similar
Dogecoin
(CCC:

DOGE-USD

).

A close-up shot of Tesla (TSLA) CEO Elon Musk.

Source: vasilis asvestas / Shutterstock.com

Dogecoin has surged by over 12,200% in the last 12 months. And these returns are at a current price of nearly 31 cents. At the beginning of May, Dogecoin touched a loftier of 73 cents.

Even at current levels, Dogecoin has a marketplace capitalization of $40 billion.
Ford
(NYSE:

F

) currently trades at a market capitalization of $59 billion. Therefore, when Dogecoin was trading near all-time highs, the altcoin had a market capitalization that was college than F stock. This is an example of the level of frenzy.

Dogecoin Lacks a Strong Investment Thesis

If I exercise inquire a Dogecoin investor on the reasons for the rally, the most probable answer is the backing by Elon Musk. It’s a serial of tweets over time that spurred Dogecoin to all-fourth dimension highs. Of course, the CEO of
Tesla
(NASDAQ:

TSLA

) claims to be holding Dogecoin. However, that’due south non reason plenty to consider exposure to a meme coin.

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Dogecoin investors volition as well talk about the possibility of wider adoption of the cryptocurrency. I would rather be invested in
Bitcoin
(CCC:




BTC-USD




) and
Ethereum
(CCC:

ETH-USD

) if I am bullish on wider adoption of cryptocurrencies.

If I had to buy an altcoin, I would rather be invested in
Polygon
(CCC:

MATIC-USD

) than Dogecoin. Polygon is a not-speculative altcoin that addresses the challenges related to high fees and lower transaction per 2d in Ethereum. With the growth of decentralized finance, Polygon seems to have a bright futurity.

My but betoken is that at that place are possibly dozens of altcoins that have potent employ cases. I don’t observe a reason to exist invested in Dogecoin, which seems to depend on Musk for survival.

Cryptocurrencies are in a Zone of Dubiety

In the final rally, Bitcoin surged to a high of $64,800. A sharp correction followed and Bitcoin briefly slipped to well-nigh $xxx,000. Information technology goes without saying that if Bitcoin and Ethereum pass up, altcoins will have a sharper correction.

There were 2 reasons for the big correction. First and foremost, China’due south clampdown on cryptocurrencies impacted sentiments. Further, Musk opined that Bitcoin was non really surroundings friendly. Considering the significant electricity consumption.

Last month, U.S. Treasury besides called for stricter cryptocurrency compliance. The Treasury believes that cryptocurrencies pose taxation evasion hazard. It seems very likely that the U.Due south. volition regulate cryptocurrencies in the foreseeable future.

With the decentralized world facing the risk of regulations, cryptocurrencies are currently in an uncertain zone. In these times, it might not exist a good idea to invest in a meme coin. I believe that further correction might exist coming for Dogecoin as a current marketplace capitalization of $forty billion looks unreasonable.

Final Views

Bitcoin has also been talked about as an inflation hedge and a store of value. That’s understandable to some extent with the cryptocurrency having a limited supply of 21 million.

On the other hand, Dogecoin has a circulating supply of 130 billion with no upper limited to the amount of coin that can be mined. Clearly, the altcoin is significantly inflationary in nature and might not serve as a store of value.

Overall, it seems that the only hope for Dogecoin are tweets from Musk. One promise for the altcoin is a possible new that Tesla will accept Dogecoin equally a payment method.

Therefore, investors tin notwithstanding consider some speculative exposure. However, it might be too risky to go overboard on this cryptocurrency.

On the engagement of publication,

Faisal Humayun

 did not take (either directly or indirectly) whatever positions in any of the securities mentioned in this commodity. The opinions expressed in this article are those of the writer, subject field to the InvestorPlace.com Publishing Guidelines.

Faisal Humayun is a senior inquiry analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

Source: https://investorplace.com/2021/06/the-future-of-dogecoin-is-in-the-hands-of-elon-musk/

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