The Dogecoin saga seems to be over as the price retraced lower sharply from the highs, putting a lot of buyers who have not already reduced their exposure in a very difficult position.
At the time of writing, the price of DOGE hovers around 18 cents, which is where the daily 200 simple moving average is also located, yet the topic for today is on what we could learn from this failure.
Gains based on over-speculation eventually will be given up
Back in the days, bubbles were created when market participants had very high expectations and when fundamentals eventually showed the gap, the bursting phase eventually brought valuations to more normal levels.
In the case of Dogecoin, buyers were buying despite information suggesting this coin has no real value or purpose in the real economy. In fact, its founders established the Blockchain as a form of a joke, without expecting it to grow.
Quick-profits remain a fallacy
In April 2021, DOGE was trading for little below 5 cents and by the first half of May, the price had managed to reach a staggering 75 cents. Such returns in less than a month are impossible to sustain and the natural reaction had been a sharp retracement lower. No positive news was able to revive buyers thus far.
The circumstances are not favorable, considering the entire market is in a decline for the past several months.
Famous people endorsing crypto is not necessarily a sign of trust
A lot of chatter around Elon Musk’s Dogecoin endorsement generated FOMO and buyers stumbled to buy the token regardless of elevated valuations. However, now that the bubble is bursting, Musk’s positive comments do not influence the price.
It can be a lesson for anyone that just because famous people advertise an “investment opportunity”, it does not guarantee success.
How can traders adapt?
Diversification remains one of the ways traders can protect against such sharp bearish moves. That can be done by working with cryptocurrency trading platforms like MrGuru, where tens of crypto instruments are already covered.
Despite strong interest in these assets, major brokerages still present a very slim crypto offer, favoring dedicated platforms specialized only in crypto.
Considering MrGuru employs a professional support team, each new customer will get the right assistance based on their knowledge. All customers are treated equally with a standard account and access to all benefits regardless of the initial deposit.
Using MrGuru means traders can get upside or downside exposure on DOGE or other Cryptocurrencies like Neo, Stellar, Cardano, IOTA, and Ethereum Classic. Despite an apparent positive correlation, each token behaves in a different way.
Volatility is expected to remain elevated, although periods of calm will occur from time to time. Traders need to take precautions and learn from what happened to Dogecoin.
Cryptocurrency trading involves a certain degree of risk and volatile price action movements can result in both higher profits or losses.
