What is Dogecoin?
Cryptocurrency seems to be the new shiny object every investor is chasing nowadays. So what is it? Cryptocurrency comes from the word ‘crypto’ and ‘currency’.
Like most currencies used, cryptocurrencies also store value. It's popularity soared as it acts as a hedge against depreciation due to the FED continuous printing of money.
However, cryptocurrencies are de-centralised and not regulated. It relies on encryption technology and verification to make transfers.
Dogecoin is currently the fourth largest cryptocurrency that started as a joke. It was created in 2013 to poke fun at cryptocurrency bitcoin.
It has remained a meme, a funny internet currency but things changed when Elon Musk repeatedly tweeted about cryptocurrency. Dogecoin has gain serious momentum and it is up 9,765.55% Year to Date (YTD)
Who is dogecoin millionaire
I am sure many came across the viral video of a Los Angeles resident Glauber Contessoto becoming a millionaire two month after investing into dogecoin.
He invested his life savings of US$180,000 into dogecoin when it was at US$0.045.
Two months later, at the current price of $0.55, his initial investment has almost hit US$2M!
In an interview with CNBC, he said he sold all the stocks he owned to invest in dogecoin. His decision was partially due to Elon Musk’s support of dogecoin. Another reason was his love for the reddit community surrounding the digital coin and how it was inspired by the Shiba Inu meme.
He mentioned that he has no plans of selling until the investment portfolio reaches US$10M, where in that case he will take out US$1M for lifestyle needs.
What did he do right?
Many financial experts will scorn at the idea of investing your life savings into one single stock, what more an extremely speculative digital asset. This is a one in a million, no pun intended, success story. It is as though he had won the lottery.
Are there any merits to his investment thesis? In 2021, who is to judge whether one is right or wrong. Given the sky-high valuations we’ve seen in 2020 and a massive bull run.
Albeit unconventional, what he did right was probably opening his position at US$0.045, at a very low price when it was not hyped up yet.
The real key however, is his indifference to the gains of dogecoin resulting in paper gains on his portfolio. I is easier said then done to ride something up 1,000%! This stems from his conviction in dogecoin.
He has managed to control his emotion through the volatile swings and if you are a trader who frequently caved in to lock in small gains with your trades, this is something to learn.
What could go wrong!
This chart below is on Bitcoin which has a much longer history. What you realise is that the journey up has many MANY horrific crashes along the way that could result in losses if cashed out wrongly.
Dogecoin seems to be even more volatile.
In 2018, it fell from US$0.16 to only US$0.03. >80% loss!
A wrong move like this could almost wipe out all his years of saving.
On top of that he will be in debt as he has bought doge-coin on margin.
It is horrifying to have to re-start and rebuild your wealth at the age of 33, due to one mistake.
For his case, he seems to be single without much family obligations. This could probably be why he could afford to make such an investment.
Not any regular person should casually follow what he did.
Celebrity's view on Dogecoin
Mark Cuban has announced the acceptance of dogecoin as payment for tickets and NBA Dallas Mavericks fan merchandise online.
Billionaire Elon Musk is a huge fan of Dogecoin, the self-proclaimed 'Dogefather' has tweeted that Dogecoin the people's currency.
Rapper Snoop Dog has mentioned investing into Dogecoin and talking about it regularly in his podcast.
Youtuber Jake Paul akin Dogecoin as Bitcoin's brother. He revealed investing into Bitcoin and he sees Dogecoin having the same potential.
Final words
Despite being a huge supporter of Dogecoin, Musk urged investors not to invest their life savings into crypto and invest with caution.
We too stand by this idea of not putting all your eggs in one basket as it is extremely risky. Invest safe and because high risk does not necessarily equate to high rewards.
Invest based on your risk appetite and profile. If you have family members to support, it is unwise to invest into such a speculative and volatile asset.
We believe in investing for the long term and that includes cryptocurrency.
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