Over the past several months, the Dogecoin price has experienced a consistent decline. However, over the past two weeks the Dogecoin price has rebounded considerably. Should investors be bullish on Dogecoin? CCN.com examines the recent Dogecoin price increase.
September 4 was a refreshing day for altcoin investors, as a number of altcoins saw significant price increases. One standout was Dogecoin, who experienced a greater-than-18% 24-hour price increase from September 3-4. After resting at 27 satoshis on September 2, the Dogecoin price began to move upwards. By September 3, Dogecoin was worth 29 satoshis–not a large increase, but it is significant because it was just the start of what proved to be an impressive price rebound. The next day, Dogecoin continued its dramatic price increase, vaulting to 34 satoshis.
This was a welcome change for Dogecoin investors, who have watched the price of Dogecoin decrease for most of 2014, which in turn has dropped Dogecoin further and further down the market cap charts.
September 4th’s 18% 24-hour Dogecoin price increase did not occur in a vacuum. The Dogecoin price has trended upward for two consecutive weeks. After declining to 22 satoshis on August 25, the price rose dramatically to 29 satoshis over the following 24 hours. The Dogecoin price could not sustain such a rapid 32% increase, however, and the price declined slightly to a mean of about 26 satoshis until September 2, when it began its present spike.
After September 4th’s rapid Dogecoin price increase, possibly caused by Dogecoin hype relating to GoCoin’s new partnerships, investors should anticipate the possibility of a modest price decline similar to the one that occurred from August 25-28, as the hype cools off.
At this point in cryptocurrency history, altcoins are incredibly volatile and should not be considered safe for long-term investments. That said, Dogecoin is one of the stronger altcoins available currently, and one of the few to receive what would constitute a “passing grade” from CoinGecko’s comprehensive metric ranking algorithm. In fact, CoinGecko ranks Dogecoin as the #1 altcoin in overall coin strength, trailing only Bitcoin. Specifically, Dogecoin has a very active community and a developer who regularly interacts with the coin’s source code, which are both incredibly vital if a coin hopes to prevail over the long-term. Dogecoin’s strong community presence is even more impressive when one considers the prolonged price decline the coin has experienced this year.
However, despite its strong foundation, the Dogecoin price must still contend with a formidable nemesis–currency inflation. Once the initial supply of 100 billion Dogecoins has been mined in approximately January 2015, Dogecoin will inflate at 5 billion coins per year. While the rate of Dogecoin inflation will decrease yearly, sans growth in the economy, inflation will undoubtedly drive the Dogecoin price down. As long as more Dogecoins enter circulation than leave circulation (which happens when users lose or burn their coins), the relative value of each Dogecoin will decrease over time. Decreasing coin value leads miners to sell the coins they mine rather than hold them, which places sell pressure on the coin and drives prices down. Dogecoin can mitigate the perils of inflation by attracting new investors, but to some extent inflation will hurt the long-term prospects of the Dogecoin price.
Obviously, it’s far too early to say that the Dogecoin price is going to the moon, but for now, investors can take solace in the fact that the price is headed in the right direction.
Last modified: June 10, 2020 12:17 PM UTC