Image credits: https://pixabay.com/photos/dogecoin-coins-cryptocurrency-6363104/
Diversification is one of the most powerful ideas in finance and maybe the best one available to investors. It’s rooted in basic principles and logic: you spread your investments both among and within different asset classes so that your exposure to any one type is limited. It applies equally in cryptocurrency investing. The low correlation between cryptocurrencies means that digital assets move opposite to each other, so you should diversify your investment portfolio for a higher return per unit of risk. A well-balanced portfolio comprises multiple types of cryptocurrencies with different use cases and risk levels.
You can allocate your funds between cryptocurrencies with the largest market caps – Bitcoin, Ethereum, and everything else – or check out meme coins, which have evolved into legitimate projects with active communities and real-world use cases. Dogecoin, for instance, can be used to tip content creators on Reddit and other social media platforms. The Dogecoin price USD frequently fluctuates due to social media influence, retail and institutional interest, political developments, and favorable technical challenges. Long-term price predictions are limited and purely speculative.
2024 has been a big year for meme coins, with cryptocurrencies like Dogecoin, Pepe Unchained, and Popcat making the headlines with their impressive market performance. It’s never the right nor the wrong time to invest, so it largely comes down to your preferences, attitude to risk, and what you hope to achieve. If you require pertinent information to make your decision, please continue reading.
Meme Coins Are Cryptocurrencies That Pay Homage To A Meme
Meme coins are digital currencies sparked by literal memes, which can be defined as pieces of culture, typically jokes, that gain influence through online transmission. Memes are relatable interpretations of the world with funny images and texts that spread rapidly through social media and can die out just as fast. You can take an image out of context and use text to describe a situation where the image would make sense; you can edit the image, but imagery for most memes is kept simple. Memes function as word-of-mouth marketing to entice cryptocurrency investment. Thousands of meme coins are created daily, and the vast majority fail to gain meaningful traction or value.
Dogecoin Is The Most Widely Recognized Meme Coin
Based on the same technology as Bitcoin and Litecoin, Dogecoin was launched in December 2013 with the image of the Shiba Inu dog as its logo. To understand Dogecoin, you must know the Doge meme, whose story began in February 2010, when Japanese kindergarten teacher Atsuko Sato posted photos of her Shiba Inu pet Kabosu on her blog. Internet users shared zoomed-in photos of the dog’s face with his eyebrows raised. Introduced as a joke currency, Dogecoin has become a phenomenon, with Elon Musk and other prominent figures endorsing the cryptocurrency, rising by 324% in 2024.
Compared to other cryptocurrencies, Dogecoin had a strong infrastructure, with developers working on updates to improve network security and efficiency. It was created by software engineers Billy Marcus and Jackson Palmer, who believed that cryptocurrency was taken too seriously and wasn’t a great deal of fun. Though Dogecoin can be used for transactions and purchases, it’s not an excellent way to hold value as there’s no limit to the number of coins created by mining. It’s inflationary, but inflation is low and predictable because Dogecoin has a predetermined annual issuance of five billion tokens.
Meme Coins Offer Considerable Short-Term Gains
Often created as jokes or parodies, meme coins have entertainment value; some catch on while others fade into obscurity. Meme coins have the potential to go viral, and we’ve witnessed some remarkable examples in the past, attracting many new on-chain users, even if they lack assurance of future profits. Meme coins are profitable as speculative investments, as there’s hope for large gains, but the digital assets aren’t suitable for long-term investment purposes. Your cryptocurrency trading platform should give you enough information to identify market cycles, especially if you’re trading Dogecoin. Market cycles are imperfect, showing a tendency for booms and busts.
Getting a firm grasp of fundamental and technical analysis takes some time, but the toughest job you have is to keep your emotions in check and make decisions based on reason. The temptation to trade is overwhelming, so you must develop a well-defined trading plan and cultivate a sense of healthy skepticism. Successful investors know they must overcome hope, greed, panic, guilt, and excitement to avoid decisions that will damage their accounts. They rely on charts, trends, patterns, and statistical data to make the best decision about when to buy or sell a cryptocurrency.
Not All Meme Coins Are Created Equal
New meme coins are created and put on the market at a rapid pace, which makes the cryptocurrency space even more bloated and confusing. There are a lot of different digital assets, and they’re not all created equal, so whether you’re a first-time buyer or a seasoned investor, do extensive research before investing. It’s possible to profit from merely speculating on continued speculation. Selecting the right meme coin to invest in requires carefully considering the following:
- Market trends: Many factors can alter price trajectories in both the short and the long term, such as new technology, the current attitude or mood of investors, regulatory requirements, and institutional adoption. Use moving averages, the Relative Strength Index, and the moving average convergence/divergence to identify trends.
- Reserves and liquidity: The most detrimental events in the cryptocurrency landscape are self-inflicted, such as exchange collapsing, and cause widespread confusion and mistrust. You can assess a meme coin’s liquidity by looking at its market cap, which is calculated by multiplying its market price by how many tokens are in circulation.
- Influencer endorsements: Influencers leave a lasting impression on any cryptocurrency enthusiast, and with a large number of loyal followers, they can cause significant market changes. Elon Musk, the CEO of Tesla and SpaceX, is a long-time fan of Dogecoin, and the meme coin soared in recent months following the billionaire’s support of Donald Trump’s campaign.
Once your trading account is funded, you can buy your favorite meme coin using the spot trading feature. Delivery takes place either immediately or in a few days.