Since the close of trading last week, the price of Dogecoin (DOGE 11.34%) had crashed over 21%, as of 1:56 p.m. ET Thursday. The crypto sector has taken a beating all week, with few cryptocurrencies spared.
While Dogecoin’s network has never had much real-world utility, it is one of the original cryptocurrencies and to this day remains a top 10 cryptocurrency by market cap.
Cryptocurrencies often move in tandem with the sector, which is heavily influenced by Bitcoin, the world’s largest cryptocurrency by market cap. Bitcoin has been crushed as investors have begun to question whether the token is truly a hedge against currency debasement and inflation. Tech stocks have also struggled lately, and cryptocurrencies can trade in a correlated fashion with this sector as well.
There’s a possibility that investors are treating crypto like software stocks, which are selling off amid fears that artificial intelligence will significantly upend current software solutions and business models. Blockchain technology has been seen as one of the most innovative new technologies, so it’s possible that crypto investors are worried about how future AI will affect it.
When investing in cryptocurrencies, one must be aware that this is an inherently volatile sector. Just like cryptocurrencies can soar quickly, they can also collapse quickly, too.
While there may be some dip-buying opportunities in the crypto sector, I don’t view Dogecoin as one of them. The token has long been a meme token, and its network offers no real-world utility, as far as I can tell.
