A WORD FROM THE AUTHOR: Iāll admit it. Iām not the most up-to-speed with investing in cryptocurrency. This past week, I took the time to dedicate a small percentage of my investing savings to crypto. After seeing what happened to Dogecoin, Iām diversifying my crypto portfolio even further with BTC, LINK, ADA, etc.
I have a close friend who is all about the crypto markets. To him, theyāre more interesting than the stock market with the potential for exponential growth. As always, Iām not a financial advisor.
Doge Success Stories
You must have been living under a rock if you havenāt heard the success of Dogecoin this week. Within the past fourteen days, millionaires have emerged from this alt-coin pump.
Admittedly, I had invested $10 dollars last December and sold for a loss two weeks after. āDogecoin is an Internet joke!ā I thought. Well, just because somethingās a joke, doesnāt mean you canāt make money off of it. Iām appalled at the fact that I would have received an incredible profit margin if Iād held onto the asset.
What is Dogecoin and Why the Pump?
Dogecoin is a cryptocurrency, like Bitcoin or Ethereumāalthough itās a very different animal than either of these popular coins. Dogecoin was originally created at least in part as a lighthearted joke for crypto enthusiasts, and took its name from a once-popular meme. - Forbes
All cryptocurrency uses blockchain technology. While Dogecoin is rooted in mathematical fundamentals, it was solely created as a joke.
I think the reason for the insane price jump comes down to two factors: culture and accessibility.
Elon Musk tweeted about Dogecoin multiple times, calling it his favorite cryptocurrency. Musk has the ability to move markets for better or for worse when he tweets like this. People are notified and rally behind whatever he is endorsing which resulted in a 1,000% increase of the price from the start of 2021.
Dogecoin isnāt listed on Coinbase, the most popular cryptocurrency exchange, but is listed on Robinhood instead. Many Robinhood users donāt need to go through other accounts to get their share of Doge which makes purchasing the crypto easier than ever.
What I Learned From This Experience
The best phrase a friend told me this week was, āMoney is imaginary.ā This showed me that Dogecoin, a meme alt-coin, had the potential to turn average investors into millionaires within one or two days. From the time I invested to the time I cashed out, I saw growth slowing more than usual on the asset which led me to reap my rewards at an above-average price (something the GameStop crisis taught me).
Iāve learned that you should generally hold all your assets unless you desperately need the money in cash form. By holding all your assets, youāre guaranteeing a specific return if the asset (in this case the cryptocurrency) were to skyrocket. Iām allocated a solid spread of funds to my crypto on Coinbase with specific percentage allocations across the market.
Cryptocurrency shouldnāt be the majority of your investment portfolio. Stability is nice too. The value of any cryptocurrency can immediately crash on any day, but over a lifetime, can bring you great wealth.
Thanks for reading this week.
-Jordan