You remember the meteoric rise of Dogecoin price in 2021. But now there is a different situation. Bitcoin, the world’s most valuable cryptocurrency, is making remarkable strides in 2023. In 2022, there was rising interest rates and investors’ sense of risk aversion. Therefore, after the decline, the cryptocurrency market has experienced a strong recovery this year and has revived interest in the space. The Motley Fool explains his views on buying Bitcoin and not Dogecoin. Let’s look at the details.
Why hasn’t Dogecoin increased?
Surprisingly, Dogecoin, the eighth most valuable digital asset, failed to benefit from the overall market rally. With a 7% price drop in 2023 (as of June 25), a reversal of this downward trend may be on the horizon. However, if you are considering adding Dogecoin to your portfolio in hopes of making significant gains, think again. Investing in Bitcoin is a far superior choice.
Dogecoin was created in 2013 by programmers Billy Markus and Jackson Palmer as a cheerful and playful version of Bitcoin. However, that was its purpose as a dog-inspired meme token. Despite experiencing a 91% drop from its peak, Dogecoin has witnessed a staggering 2,400% increase over the past five years. Accordingly, it has enriched some investors immensely.
Dogecoin and its use case
However, Dogecoin lacks real-world use. Even ten years later it has struggled to gain widespread adoption. When we look at Kriptokoin.com, it reports that only 2,167 merchants worldwide accept payments with Dogecoin.
Also, Dogecoin price movements are primarily driven by cycles of hype driven by events such as Reddit-induced frenzy and Elon Musk’s tweets. Trying to time these types of social media-supported activities is not a sound investment thesis.
Bitcoin as the ultimate store of value
Bitcoin, the world’s first and largest cryptocurrency, has a market capitalization of $585 billion. It also exceeds the market value of all other digital assets. Dogecoin provides critical network effects that DOGE cannot rival. Over 14 years of existence of Bitcoin has demonstrated its resilience in the face of major market fluctuations and the collapse of leading crypto firms. Its price has increased by 81% in 2023 alone.
Some investors and economists see Bitcoin as a potential global reserve currency in the future. But currently its most attractive investment feature lies in its growing popularity as a store of value. Bitcoin’s digital nature makes it easy to carry and transact, especially given its divisibility to eight decimal places. Also, the supply of Bitcoin is fixed at 21 million coins determined in the source code of the network. It also offers absolute scarcity. But there is no limit for Dogecoin.
Potential catalyst for Bitcoin
Despite the regulatory concerns looming over the crypto industry, there is a promising development for Bitcoin. BlackRock, a major asset manager, has applied for a Bitcoin-focused exchange-traded fund (ETF). Accordingly, it showed that a major player in the financial markets recognized the opportunity amid regulatory scrutiny on crypto exchanges.
Approval of BlackRock’s ETF will pave the way for both individual and institutional investors to easily access Bitcoin. It will also cause an increase in demand for this fixed-supply asset. While regulatory uncertainties remain, this potential catalyst has the power to drive long-term adoption of Bitcoin. However, it is difficult to say the same for Dogecoin.
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