Everything about the cryptocurrency is a joke, and that is not necessarily said with any disdain for it. However, when people start believing in Dogecoin with their money, a cryptocurrency that was literally started as a joke, the deeply-rooted peculiarities of the asset should be made clear to everybody.
Traders should be made aware of the true potential of Dogecoin. Is it truly the future of crypto trading, or is it destined never to surpass its original purpose of making people laugh when they hear its name?
Hate him or love him, Elon Musk is quite a fascinating character. He said as much about himself during his opening monologue for Saturday Night Live (SNL), which ended up being the catalyst for a massive retracement in the price of Dogecoin. Musk began by alluding to the fact that sometimes he says things without giving them a second thought beforehand.
The Dogefather— Elon Musk (@elonmusk) April 28, 2021
SNL May 8
This should be the wake-up call that so many Dogecoin enthusiasts desperately need. The price action of the asset continues to be devoid of any intrinsic value. Instead, the cryptocurrency advances at the whim of social media celebrities such as the self-proclaimed "Dogefather" and "Emperor of Mars", whose facetious approach seems to make Musk the perfect champion of traders with a sense of humour.
Elon Musk, who admitted on SNL that Dogecoin is indeed a form of a "hustle", seems to be amongst the very few who take the cryptocurrency for what it's actually worth - a joke with the established market order.
Cryptocurrency is promising, but please invest with caution! https://t.co/A4kplcP8Vq— Elon Musk (@elonmusk) May 7, 2021
Making fun with the established order is not necessarily a bad thing. In fact, it could be quite uplifting given the highly competitive "normal" state of the market. However, misconstruing Musk's typically humorous tweets for attestation of Dogecoin's prospects is a mistake.
The price of Dogecoin could indeed go "to the moon", as long as everybody believes in it. This is true of every financial instrument; however, Dogecoin seems to possess one unique quality. Everybody seems to be on board with the hype, or in this case, with the joke.
For the time being, the joke seems to be working in its own favour - garnering interest amongst traders precisely because it is such a novel and unique instrument. But again, a distinction should be drawn between its capacity as a speculative boon and alleged potential as a long term investment.
As can be seen on the 4H chart above, the price of the crypto continues to advance within the boundaries of an ascending channel, despite the recent tribulations. It appears to be consolidating above a major resistance-turned-support, which in itself represents a joke of a kind - the support can be found at the 0.420 price level. Something that Elon Musk could really appreciate while on the Joe Rogan podcast.
At any rate, the Dogecoin remains a highly speculative instrument. Any ripple that could wipe out more than 20 per cent of the asset's value in a matter of hours demonstrates its unpreparedness to be considered as a long term investment.
While the prospects for future growth remain very much active, traders should not allow themselves to become the butt of a "bad" joke.