One of the most popular memecoins, Dogecoin (DOGE) has slumped along with the rest of crypto since the beginning of 2022. Because of regulatory pressures from foreign governments and a collective sense of foreboding from impending Fed interest rate hikes, many stocks and cryptos have reacted sharply and seen notable slumps, with DOGE being no exception.
Compared to other memecoins like Shiba Inu (SHIB), which has seen a 20% rise since the January slump, DOGE is only back up 7%, begging the question of the coin’s future in 2022. Will the coin make millionaires like it did in 2021, or is Dogecoin on the way out?
- Can Dogecoin Drop Lower Than $0.05?
- Why is Dogecoin Going Down?
- How to Short Dogecoin
- Step 1: Open a Crypto Exchange Account
- Step 2: Fund Your Account
- Step 3: Choose Your Leverage
- Step 4: Enter Your Short Position
- Can Dogecoin Still Hit $1.00 in 2022?
- Where To Buy Dogecoin
- Will Dogecoin Keep Crashing?
- Is Now A Good Time To Buy Dogecoin?
Can Dogecoin Drop Lower Than $0.05?
Unlike blue-chip cryptocurrencies such as Bitcoin and Ethereum, Dogecoin is a speculative asset whose price action hinges heavily on short-term news rather than established fundamentals. Though it can be affected by macroeconomic factors and broader investor sentiment, all it takes is one tweet from Elon Musk to send the price skyrocketing or to the ground. In fact, a recent tweet from Musk stating that Dogecoin can be used to buy Tesla merchandise sent the coin up 13%.
The price of Dogecoin is also dependent on retained investor interest and the applicability of the coin beyond being just a memecoin. For example, Dogecoin is a way for Reddit and Twitter users to interact with content by tipping in DOGE. Along this same vein, Dogecoin has also been used for various crowdfunding and donation campaigns. One famous example of this was when Internet users pooled $30,000 in DOGE to help send the Jamaican bobsled team to compete in the 2014 Winter Olympics.
These limited use cases, however, don’t influence Dogecoin’s price as much as larger scale market effects or short term events do. This situation ends up producing an uncertain dynamic for investors looking to get in on Dogecoin: a tweet from Elon that puts DOGE on the move or market trends supporting other crypto that occur. Waiting around for either is not a sustainable strategy. If neither happen, Dogecoin’s price could see a drop.
Why is Dogecoin Going Down?
A large part of why the price of Dogecoin and other memecoins are falling is in reaction to the Fed interest rate hikes taking place later this year. Prices of assets like Dogecoin are negatively reacting with the Fed’s decision to increase interest rates to combat inflation, which could be a contributing factor to the January sell-off. Coins like Dogecoin also parallel movement in larger cryptos like Bitcoin, and the general volatility of Bitcoin in reaction to market events could be an influencing factor of DOGE’s price.
Another macro-level that could be promoting the downward price movement of Dogecoin is Russia’s central bank taking a stern stance on crypto. Russia’s central bank described crypto as a pyramid scheme that seeks to undermine the sovereignty of monetary policy and proposed a ban on crypto trading and mining.
The importance of this statement lies in Russia’s standing as the third largest country to contribute to Bitcoin mining, behind Kazakhstan and the United States. Though no changes have been set in stone, the views expressed by Russia’s central bank could be a contributing factor to Dogecoin’s downward price.
Finally, the price of DOGE is also influenced by popularity and events in the short term. A recent lack of general hype surrounding the coin could also be a factor explaining why Dogecoin has been seeing a slump.
How to Short Dogecoin
Trading derivatives is a risky tactic especially given Dogecoin’s acute volatility. When it comes to shorting Dogecoin, however, the process itself isn’t too difficult. The following steps explain how to start shorting Dogecoin.
Step 1: Open a Crypto Exchange Account
Open an account with a quality exchange that allows you to access derivatives trading. Bybit and FTX are two great exchanges to begin with as each offers state-of-the-art security features and custom tools for traders looking to short DOGE. Both Bybit and FTX are renowned exchanges; however, neither of these exchanges can be accessed by U.S. citizens.
Step 2: Fund Your Account
Deposit funds in your account prior to trading. Funding your account is straightforward with common methods including direct bank transfers and transferring tokens from another wallet. Once your account is funded, you are ready for the next step.
Step 3: Choose Your Leverage
Leverage is the ratio of your collateral to your borrowed funds; basically, it can be thought of as a multiplier on your investment. For example, Bybit offers up to 100x leverage when trading crypto. FTX on the other hand offers up to 20x leverage, and though this seems minimal in comparison, the level of risk you are exposing yourself to at a 20x multiple is much lower than 100x.
Liquidation helps describe this risk further. When it comes to trading crypto, liquidation refers to when your leveraged position is forcefully closed by your exchange once part or all of your initial margin is lost. This action occurs if you can no longer meet margin requirements to be in a leveraged position, and so understanding this concept reveals how higher leveraged positions are more prone to liquidation risk. Finding a level of risk that you are comfortable with is key, and after doing this you are ready for the final step.
Step 4: Enter Your Short Position
Since a short position on DOGE bets that the price of the token will go down, you should set up a stop-loss order and target price to reduce exposure to loss and volatility. Choose the amount of collateral that you are willing to put up to maintain the ability to trade on margin. Then, click the sell button.
Can Dogecoin Still Hit $1.00 in 2022?
Since Dogecoin is such a volatile asset, much of its price action is unpredictable. Sure, you can look at overall market trends and make educated guesses about where Dogecoin is headed, butb one tweet or event can send the price of DOGE drastically up or down.
For investors to see a big price increase in DOGE, factors to consider not only include overall market health but also how much buzz there is around the coin. Are celebrities talking about it? What is the Twitter sentiment like? These factors are important to consider as Dogecoin’s price action is highly susceptible to these events and could change on a moment's notice.
Where To Buy Dogecoin
It's important to note that not all exchanges host Dogecoin. Some great options to consider, however, include Gemini, Coinbase Global Inc. (NASDAQ: COIN), Crypto.com and Voyager. Even brokerages like Robinhood Markets Inc. (NASDAQ: HOOD) and Webull allow you to access and trade Dogecoin.
- securely through Coinbase's websiteBest For:Coinbase Learn
Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts.
Will Dogecoin Keep Crashing?
Several factors could affect the health of DOGE, starting with how crypto in general is doing. Since the January dip, most cryptocurrencies seem to be rebounding. If the markets take a turn for the worse, especially with the Fed’s interest rate set to come out in March, then Dogecoin could face another slump.
More important to Dogecoin, however, are short-term events that could tank its price. A tweet from someone like Elon Musk that diminishes crypto in general could send Dogecoin into a downward spiral. Being mindful of these events is key in understanding the price movements of Dogecoin.
Dogecoin is also not the only memecoin on the block anymore. For example, Shiba Inu is another widely popular memecoin that can be seen as having more real-world applicability than Dogecoin. Other coins directly challenge the reign of Dogecoin such as Floki Inu and LEASH. As more such coins enter the landscape, investors should account for how the competition could affect the longevity of Dogecoin.
Is Now A Good Time To Buy Dogecoin?
If your goal is to generate sustainable long-term wealth, Dogecoin is not the ideal way to do so. Investors should look for assets whose performance is tied to its underlying technology or true valuation as ideal long-term investment vehicles. Dogecoin is the opposite with drastic price movements based around social media hype that makes it difficult to figure out when to exit an investment.
The flip side of this, however, is that for investors with a high risk tolerance, Dogecoin could be a great opportunity to make profits. If investors are able to time the market and can predict the asset’s price to some degree, then they could reap significant returns. It should be noted that this method of investing is inherently much riskier and could also expose investors to significant losses.
The decision to invest in Dogecoin is wholly dependent on your investing goals and appetite for risk. Only after careful consideration of your investment goals should you decide to invest in an asset like Dogecoin.
- Exclusive Crypto Airdrops
- Altcoin of the Week
- Insider Interviews
- News & Show Highlights
- Completely FREE