Is Dogecoin a Good Investment in 2023?
Dogecoin has been through a tough vear market, dropping by about 88.5% from the all-time high price it reached in May of 2021. Although there have been some recovery rallies along the way, the Dogecoin market has mostly been moving downwards following the big rally in 2021.
Even if we take a look at a shorter timeframe, Dogecoin’s performance hasn’t been particularly impressive. DOGE is up 20% since January 1, 2023, which seems solid at first glance. However, many other top cryptocurrencies have performed much better in the same time period. For example, Bitcoin has increased by 44% this year, while Solana has gained a whopping 139%.
So, is Dogecoin a good investment in 2023? In this article, we will be taking a look at both the positives and negatives of investing in DOGE in 2023. We’ll also highlight the Dogecoin price prediction based on the current technical analysis factors.
Reasons for investing in Dogecoin
If you’re looking to invest in cryptocurrency and Dogecoin in on your shortlist, we’ll highlight a few of the most important factors going in favor of Dogecoin as an investment in 2023.
Dogecoin is trading well below its all-time highs
The simplest reason in favor of investing in Dogecoin is the fact that DOGE is trading significantly below its all-time highs. Dogecoin reached its historical peak in May of 2021, when the DOGE price hit $0.73. Today, DOGE is changing hands at $0.084, which represents a decrease of about 85% from the all-time high.
Despite this, Dogecoin has kept a strong position relative to the rest of the crypto market, as it is currently the 10th largest crypto asset by market capitalization. In fact, if we exclude stablecoins, there’s only 6 other cryptocurrencies that have a larger market cap than DOGE.
If you’re wondering if you should buy Dogecoin, now might be a good time, as DOGE has shown the capacity to reach much higher prices in the past. While there’s no guarantee that Dogecoin will ever go on a big rally again or reach $1 or above, accumulating some DOGE now is probably a better long-term bet than buying DOGE when it’s already in the middle of a rally.
Elon Musk is still a fan of Dogecoin
While Elon Musk has become a more controversial figure recently, it’s undeniable that Elon Musk's support for Dogecoin is one of the biggest reasons why Dogecoin is where it is today. Without Musk raising the coin’s profile, it would be difficult to imagine DOGE sitting at a market capitalization of $11.2 billion.
While Musk isn’t discussing Dogecoin on his Twitter account as much as he did before, the billionaire entrepreneur is still occasionally throwing the Dogecoin community a bone. For example, on February 22, 2023, Musk tweeted “High time I confessed I let the Doge out”. The tweet had an impact on the DOGE markets, although it only resulted in a smaller price spike.
High time I confessed I let the Doge out pic.twitter.com/TAi4p1khAd
— Elon Musk (@elonmusk) February 22, 2023
Whether you like it or not, Elon Musk will likely continue to play a big role in the Dogecoin narrative moving forward. For now, he still seems to be enthusiastic about the project, which bodes well for DOGE’s prospects moving forward.
The Dogecoin Foundation is incentivizing Dogecoin development
Let’s be honest—most people don’t really care about Dogecoin’s technical background, but invest in and use DOGE as a meme.
However, it’s still important that Dogecoin provides a good user experience, and allows users to make transactions quickly and cheaply. This would allow DOGE to go viral more easily, and see widespread use for making peer-to-peer transactions. DOGE has already seen some adoption as a currency for tipping internet users for making funny and informative posts.
The Dogecoin Foundation, which was re-established in 2021 to accelerate Dogecoin development and protect the Dogecoin brand, has recently established a Dogecoin Core development fund. This fund is providing DOGE rewards to developers that contribute to releases of the Dogecoin Core software, which allows anyone to run a node on the Dogecoin network. With these incentives, we could see more talented developers get on board with the Dogecoin project.
There have also been some discussions about potentially moving Dogecoin over to a Proof-of-Stake consensus mechanism. This would make Dogecoin much more environmentally-friendly, and could also open up new ways of improving its scalability.
If you’re not sure if you want to buy Dogecoin or not, you can try out how it works by using a Dogecoin faucet and getting a small amount of DOGE for free. You can then transact with the coins using your Dogecoin wallet.
Reasons against investing in Dogecoin
Of course, there are also downsides to investing in Dogecoin. Let’s take a look at the main reasons why DOGE might not be the best choice for 2023.
Dogecoin is not particularly innovative
While there have been efforts to accelerate Dogecoin development, Dogecoin is not especially innovative from a technological standpoint. Dogecoin is a relatively straightforward Proof-of-Work cryptocurrency, and doesn’t offer any smart contracts functionality.
Essentially, Dogecoin’s main proposition is its meme appeal and potential to go viral on social media platforms. In terms of tech, it’s difficult to expect Dogecoin to compete with cryptocurrency projects that are focusing significant resources towards development.
Dogecoin is inflationary
Dogecoin has a built-in inflation mechanism, with 5 billion DOGE coins entering circulation each year. Cryptocurrency investors tend to value cryptocurrencies that have an upper limit on their supply. Some coins even have mechanisms in place that reduce the supply over time.
While inflation will certainly help ensure that there will be enough miners securing the Dogecoin network over the long term, it could also drive some crypto investors away from the project.
Poor macroeconomic outlook
Many economists are predicting that a global recession will happen sometime in 2023. If there will indeed be a global recession, it’s difficult to imagine that extremely speculative assets such as Dogecoin would perform well. In recessions, risky assets tend to suffer as investors move their money into assets that are perceived as safe investments.
Dogecoin price prediction for 2023: What does the year have in store for Dogecoin?
Now that we’ve highlighted the main pros and cons of investing in DOGE, let’s take a look at the algorithmic Dogecoin price prediction from CoinCodex.
According to the current technical indicators, Dogecoin is forecasted to see some minor gains in the spring, before dropping to new lows in the summer. The Dogecoin prediction for 2023 is quite gloomy, as DOGE could drop by more than 50% before finding a bottom.
So, how high will Dogecoin go after it finds a bottom? Currently, the prediction is forecasting that Dogecoin will have a strong rally in early 2023 which would take DOGE to new all-time highs. Even though the 1-year prediction is very bullish, it doesn’t expect that Dogecoin can reach $1.
How can I invest in Dogecoin?
Dogecoin is an easily accessible cryptocurrency, as you can buy DOGE on practically all major cryptocurrency exchanges. Arguably the easiest way to buy DOGE is to use an exchange like Binance, which offers the option of buying Dogecoin with a credit or debit card.
Open an account on Binance
Binance is the world’s most popular cryptocurrency exchange, and lists Dogecoin in addition to hundreds of other cryptocurrencies.
Please note that you’ll have to verify your identity before you will be able to purchase cryptocurrency on Binance. This is the case for practically all cryptocurrency exchanges where you can buy crypto with fiat currency.
Select the Credit/Debit Card option
Go to the “Buy Crypto” menu on top of the Binance user interface and select “Credit/Debit Card”.
Choose your local currency as the “Spend” currency and Dogecoin as the “Receive” currency. Input the amount you want to spend.
You will then be asked to add your card details and billing address. The exchange will guide you through the rest of the process.
Choose how you will be storing your DOGE
After the purchase is complete, you will receive your DOGE coins in your Binance account. Depending on your preferences, you can keep your DOGE on the exchange, or withdraw it to a wallet. Keeping funds on an exchange can be risky, as you have to trust that they will be managed properly. If you want improved security, consider buying and setting up a hardware cryptocurrency wallet such as the Ledger Nano S.
While purchasing crypto with a credit or debit card is a very convenient option, it comes with relatively high fees. You can purchase DOGE with lower fees by making a deposit to a cryptocurrency exchange and then buying DOGE on the exchange’s spot markets with a limit or market order.
The bottom line - is DOGE a good investment in 2023?
We can conclude that Dogecoin is certainly not dead, and could be a good investment in 2023 if there is a broader bullish turn in the cryptocurrency market. The coin is trading at a big discount from its all-time highs, and still has the support of its most prominent backer, Elon Musk.
On the other hand, the fact that Dogecoin has had a slower start to 2023 than many other coins could be a negative sign and an indicator that demand for DOGE is cooling off. Dogecoin also hasn’t made any major moves in terms of its technology.
If you’re interested in meme coins other than Dogecoin, check out our list of meme coins that could explode next.