A view of dogecoin commemorative coins, Yichang, central China’s Hubei province, May 9, 2021.
Costfoto/Barcroft Media via Getty Images
The rally pushed the coin’s market cap to nearly $44 billion, putting it solidly in the top 10 cryptocurrencies, alongside bitcoin, ethereum, binance coin and tether, according to CoinMarketCap. In the last seven days, dogecoin has rallied more than 40%.
Still, the cryptocurrency is far from its all-time high of about 73 cents per coin, reached in May.
Even amid the comeback rally, experts caution investors not to jump into dogecoin just to make money. Cryptocurrencies are highly volatile, meaning that the current streak could reverse at any point.
Only invest what you’re willing to lose
Financial experts generally advise that people looking to invest in cryptocurrencies allocate just a small amount of their portfolio to the asset. The U.K.’s Financial Conduct Authority has issued a similar warning.
“Never invest anything you aren’t willing to lose,” said Ben Weiss, co-founder and CEO of CoinFlip, one of the largest bitcoin ATM companies in the U.S.
“If you like dogecoin and think it could be a viable currency in the future, or are fans of the idea and the movement, go ahead and invest in it,” he said. “If you don’t like it or think it’s a fad, don’t invest in it.”
He also cautioned first-time cryptocurrency buyers against diving right into dogecoin without having invested in any other coins. Bitcoin has a 10-year track record at this point, which puts it at a different risk level than investing in a newer alternative coin.
And, investors shouldn’t get into dogecoin just to turn a profit in a short time.
“If any part of your brain goes, ‘This is a great way to make a quick buck,’ that’s when you should think twice,” he said.
Buy for the long-term
Of course, Weiss is a supporter of investing in cryptocurrencies and dogecoin, and he recommends that all investors hold some digital coins, even if it’s just a small slice of their portfolio.
“You never want to totally miss out,” he said. “You always kick yourself more for the things you don’t do and the opportunities you miss.”
Those who want to invest in different digital coins should assess where they stand with other personal finance and investing goals to determine if they have some extra money to put into a risky asset.