Dogecoin emerged as a parody of cryptocurrencies, but has ended up becoming one of the most popular and valuable of the moment. Led by Elon Musk, it reached its all-time high in April 2021, when investors, many inspired by the Tesla CEO, rushed to acquire the coin.
However, considering that the beginning of 2022 is proving disastrous for the vast majority of major cryptocurrencies, including Dogecoin, would it be a good time to sell the original memecoin or is it better to wait?
Reasons to sell Dogecoin
Dogecoin, or simply DOGE , is currently the twelfth largest cryptocurrency by market capitalization value. It started in 2013 as a meme coin, but over time it has gained popularity, but it is currently in a downward trend , so these would be some of the reasons to sell now (at a price of 0.1092 euros at the time of writing this article).
Cryptocurrency Dogecoin
With a finite supply of just 21 million coins, scarcity makes Bitcoin unique and is part of the reason it is the reigning cryptocurrency. However, Dogecoin is an inflationary cryptocurrency because it has no emission limit .
There are currently almost 133 billion DOGE in circulation, a figure that is increasing by 5 billion every year. Demand would have to outstrip an ever-increasing supply base for the price to rise, making it ineffective as a long-term store of value. Basically, the more Dogecoins there are in circulation, the less the coin is worth .
Other aspects that play against it is that it has no real utility as a means of payment. The founders of Dogecoin created it as a payment network. However, the token has not been widely adopted for this use. According to data from the Cryptwerk business directory , only about 2,038 businesses accept Dogecoin , a tiny figure.
Reasons to hold DOGE
Dogecoin is expected to migrate from Proof of Work (PoW) to Proof of Stake (PoS) to reduce its power consumption and increase transaction speeds. Until now, Dogecoin, like Bitcoin, has relied on PoW to validate transactions.
The switch to proof-of-stake would be a positive for Dogecoin owners because PoS would allow anyone who owns the coin to validate transactions. Also, when a new block is added to the blockchain, they receive a fixed percentage of the pledged assets as compensation. So if you have Dogecoin, it might be a good idea to hold onto it to see if the proposed switch to PoS becomes a reality.
DOGE token YTD 2022 performance (Source: CoinMarketCap)
Also, despite the fact of frequent growth, it is likely to reach a practical limit . Since the growth of cryptocurrency is predictable, it is easier to use it as a currency to buy goods and services. Therefore, the possibility of wide acceptance in the future may make Dogecoin worth holding.
Ultimately, the pros and cons to selling or not will depend on your personal situation. As in the rest of crypto assets, if you have multiplied your initial investment to sell now and get a profit, it may be a good time to try to secure that money. Although all cryptos are volatile and based on speculation, the case of Dogecoin is especially linked to it. You already know about the power of Elon Musk to kill or resurrect a cryptocurrency with a simple tweet …