Dogecoin: Why I Loved AND Hated The Recent Pump
How money? Why pump? So crypto. Much wow!
I have a love/hate relationship with dogecoin, and these past few days have emphasized both sides of it.
Over the past week, I can almost guarantee that you’ve heard SOMETHING about “dogecoin”. If somehow you haven’t, let me give you a quick overview:
Starting in April, with the price of 1 dogecoin being around $0.06 (USD), the crypto began a crazy bull run, seeing the price shoot up to as high as $0.43 in a matter of days (that’s over a 600% gain).
In the middle of all the mania, social media exploded with commentary from “the doge army” (the dogecoin equivalent of Beyoncé’s Bey-Hive). You see.. many crypto projects develop their own loyal followings that, in time, grow to become groups of die-hard advocates whose passion can sometimes cross the border of being almost “cult-like” (or, at least that’s how it appears.. we’ll get to that another time).
So, the doge army was out in droves, flooding the internet with news of their ridiculous gains and circling back for the obligatory “I told you so” to all of the “haters” that didn’t believe in their “genius” investment.
So.. now that you’re completely caught up, let’s get into the real article here: the reasons why I both really loved AND really hated this doge pump.
Spoiler alert: it has very little to do with money.
The Good
I want to kick this off on a positive note, so let’s start with the good.
A lot of people made money.
And when I say money , I don’t mean like a couple hundred or a couple thousand dollars — there were people that saw hundreds of thousands (even millions) of dollars in gains when they cashed in on the pump.
Prior to January 2021, doge was worth less than a penny (a place where it hovered since it’s last “big” pump back in January 2018). Doge army members that were in on doge from this era were buying doge at rates like 1 dogecoin for $0.003, so for $1, they were able to get upwards of 300 dogecoin. Using this example, let’s do some quick maths:
- Dec 1, 2020 — with $1, you would have bought about 333 doge
- Jan 28, 2021 — doge price hits an ATH (all-time high) around $0.07.. so your $1 investment is now worth about $23.. but you decide to hodl (to not sell)
- Feb 8, 2021 — we see a new ATH around $0.08, so you see a bit of a boost to around $26 worth of value.. but you hodl as the price settles back around $0.05
- Apr 14, 2021 — after a steady climb that started from the previous night, a new ATH is reached around $0.14 and you still hodl (with a value around $46), but this time, the price hovers there for a bit instead of falling back down.. then..
- Apr 15, 2021 — in the middle of the night, another surge kicks in, pushing doge up to around $0.28, bringing your total value to about $93.. but we’re still not done, because..
- Apr 16, 2021 — in the morning, the pump from the previous day continued as the price flew up to the latest ATH.. of about $0.43.. bringing your total value to approximately $143
That’s right folks.. $1 into dogecoin about four months ago would have bagged you about $143 (if you somehow managed to sell at the peak). Now if you wanna see how that scales, just add zeros to the end of each number (i.e. $10 -> $1,430… $100 -> $14,300… $1,000 -> $143,000).
The reason that I loved this (aside from any gains that may or may not have been seen) is that it makes a statement about the crypto space — a statement that is often difficult to tangibly prove to people newly coming into the space.
It proves that the crypto space is unlike anything that we’ve seen before and that ANYTHING can happen here.
A high school student could have gotten $20 for lunch money back in January and put it into doge.. hodled it for about four months.. then sold it for a whopping $2,860. This is the kind of potential that crypto has.
The Bad
Ok.. now that we got the rose-colored glasses out of the way, let’s address the not-so-good parts of the recent pump..
..like the “dump” part of “pump and dump”.
Like in any market, when there are winners, there are bound to be losers as well. And doge was no exception to this.
As we saw in the series of events that I highlighted earlier, the price of these crypto assets can be extremely volatile and move ridiculously quickly. For an unseasoned trader, it can be difficult to keep track of the market and assess when it would be a good time to jump in, or when it would be the best time to jump out.
As the hype for doge started to build earlier in the year with the first pump up to $0.07.. then the second pump up to $0.14.. then the third up to $0.28.. more and more new investors were intrigued by the fast-moving asset.
What then happened is that, because of FOMO (fear of missing out), many of the traders that were initially on the fence about it, started to jump in at some of the higher price points, trying to cash in on some of the successes that people were openly flaunting on the internet. Let’s look at how that looks now:
- Dec 1, 2020 — you invest in other crypto projects, but ignore doge at its $0.003 price point
- Jan 28, 2021 — doge price hits an ATH around $0.07.. so you start to hear more news about it, but you feel like you missed the window of opportunity, so you count it as just a loss
- Feb 8, 2021 — we see a new ATH around $0.08, but you were busy at the time that the price action happened, so you missed it and only noticed the movement after the price settled back at $0.05.. another missed window
- Apr 14, 2021 — after a steady climb that started from the previous night, a new ATH is reached around $0.14 and you are livid because it happened too quickly for you to catch it.. you just can’t seem to get this timing down
- Apr 15, 2021 — in the middle of the night, another surge kicks in, pushing doge up to around $0.28.. but you were asleep when this happened
- Apr 16, 2021 — in the morning, the pump from the previous day continued as the price flew up to the latest ATH of about $0.43.. and by the time you get around to checking the prices, it already fell back to about $0.36, so you decide to bite the bullet and just throw $1000 into it for about 2,780 doge
- Apr 17, 2021 — the price continues to drop relatively quickly and the pump looks like it may be over.. you see it dip to about $0.26, dropping the value of your doge holdings to about $720 (that’s almost $300 down in one day)
- Apr 18, 2021 — at the time of writing this article, doge is trading at about $0.27 and has not yet gone back above your entry point, so your money is still down and you start to wonder whether or not you should just cash out to minimize your losses before it drops any more
This is a common story that many newer investors find themselves in when they buy into the hype of these trends and popular investments with no real understanding of the market and how it works.
There are people spending money that they need for necessities (i.e. rent, food, etc.) on these crypto projects, hoping to see a quick return on their investment. Some even go as far as borrowing money to make these trades because of the misguided hope and false certainty that the hype gives them going into some of these investments.
And while we’re on the topic of hype..
The Ugly
Yeah.. we haven’t even touched on the worst part yet..
There were two main things that were massive driving forces behind this epic pump and dump — and neither of them was fundamental analysis or technical analysis. These two things were the primary sources of all the hype that ran so many investors and traders into the arms of the doge army.
High-profile endorsements and “crypto guru” advice (kinda funny how I’ve written articles on BOTH of these groups already this month).
Let’s start with the endorsements. The marching orders from well-known individuals like Snoop Dogg, Lil Yachty and Mark Cuban that flooded the internet, persuading many newer people to add doge to their portfolio. Even Elon Musk, the “TechnoKing” of Tesla himself (I sh*t you not, I didn’t make this up.. it’s actually his official title now), has come to be seen as one of the unofficial leaders of the doge army, marching his troops onward to a future of doge going “to the moon.”
But the average investor doesn’t see the man behind the curtain (or in this case, the private group chats that these influential people have). They don’t see that Elon is just trolling on Twitter and doesn’t take doge as seriously as he puts on. They don’t see that the celebrities more than likely have even less knowledge on the field than they do and are being instructed on what to say and do by others that would benefit from a pump in the crypto. They don’t see that many of these multimillionaires are trying so hard to pump the coin because they want to make up for losses that they may have incurred from earlier investments in the space.. because they didn’t know what they were doing. The veterans of the space do see these things though.. because we’ve seen them dozens of times before.
Now, onto the gurus. One of my favorite quotes about trading is this: “everyone looks like a genius during a bull run.” This statement couldn’t be more true than it is right now. From the earlier example, we see that not much effort was needed at all to see those wild gains from doge — you just needed to be in the right place, at the right time. But without knowing that, if you (a new crypto trader/investor) came across an individual online that claims to be an expert (based off of their 600% gain that they saw over the past few months) and offers to lend their services to you, you could be persuaded to take them up on that offer.
Like Wilson from “Home Improvement,” these gurus are always present (online) and are more than happy to share their sage-like wisdom. Unlike Wilson, though, this advice is normally either basic information that you could easily find on your own with a bit of research, or blatantly incorrect information that they may or may not be intentionally pedaling to the hordes of people in their audiences.
King, in the latest episode of “The Gentlemen of Crypto,” summarized it best:
The only people making money in doge are the predators in the crypto space who understand these pump and dump cycles. I’m seeing so many people on Facebook.. giving out crypto advice all of a sudden.. Look, you bought doge at the last two pumps and you sat on it. You’re not an expert. Stop it. You’re leading people astray.
Couldn’t have said it better myself, King.
Yes, I love the fact that the crypto space has once again proven itself to be a magical place where dreams come true and a person can level up from a bum to a baller in a matter of weeks.
This win for the doge army is a win for the crypto space as a whole, validating not only its existence, but its potential for growth and development as well. This is the kind of proof that turns doubters into believers (I’m trying really hard not to give off “cult-y” vibes here).
On a macro level, this was great, but what was the cost of this win on a micro level? For every few people that won, there were hordes of others that lost. New people, as they are learning the field, are starting off with bad investing/trading habits (this is like learning how to lift weights and constantly practicing with horrible form). A whole squad of new “gurus” have popped up (as they always do when they sniff out new money) and are influencing the decisions of their less informed peers. The super rich are talking to each other behind closed doors (in this case, in private chats) about how to capitalize on market movements so that they can get richer, not you.
It sounds like a convoluted Hollywood plot, but this is the reality of the crypto space right now.
So, I have three things to say to you new investors/traders:
- if you were one of the winners in the recent doge pump, congratulations
- if you were one of the losers, take this hard lesson as your first down payment of tuition to the Hard Knock School of Crypto (everyone pays tuition to learn these lessons at some point)
- if you weren’t involved at all, take note.. because you can easily become either one of the other two
Any way you look at it, everything leads back to the most important lesson in crypto (that I will gladly repeat until the day I leave this plane of existence): ALWAYS DO YOUR OWN RESEARCH!
*I am not a financial/investment advisor, this article is not financial/investment advice and any information shared here should be personally researched prior to making any financial/investment decisions.*
