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Coming up with a reason to own Dogecoin ( DOGE-USD ) besides “greater fool theory” can be a challenge.Unlike Bitcoin ( BTC-USD ), it doesn’t have scarcity, or status among institutional investors, on its side.Unlike Ethereum ( ETH-USD ), its blockchain isn’t positioned to dominate decentralized finance (DeFi).
It’s not even in a position to grab a large amount of the DeFi market, in the way that Cardano ( ADA-USD ) and Solana ( SOL-USD ) are.Until it makes further functionality improvements, it is likely not going to reach “Ethereum killer” status.There is, however, another factor at play that could help it in the months ahead.
7 Top-Rated Biotech Stocks to Buy for Q2 As reported by Benzinga.com on April 22, Currency.com CEO Steve Gregory has noted that a lot of his firm’s clients have been cycling into “meme coins” like DOGE, as well as Shiba Inu ( SHIB-USD ).He theorizes it’s a low correlation to BTC, as well as the stock market , that makes them appealing.This coin in particular, “is actually one of the top-10 least correlated coins to Bitcoin,” as Gregory put it.As it turns out, that low correlation is one of its greatest strengths.
Recently, I talked about how a high correlation with stocks is bad news for Bitcoin .
More market volatility in the months ahead could knock them both to lower prices.It may knock the other major coins lower as well, yet this may not be the case with Dogecoin and Shiba Inu.At first, it may seem odd that these two coins, still perceived by many to be jokes, could hold up better than coins more highly respected by serious investors.But think about it further.
You can see why market uncertainty may bode well for DOGE prices.If external factors like rising interest rates put more pressure on stocks, BTC and the other major coins could move lower along with it.
Intuitional sellers of established coins may cycle the capital into safe harbor assets.Retail traders, though, may do something different.Instead of moving into cash or blue chips, they may simply cycle more into the memecoins.
As the so-called “smart money” isn’t active in them (and therefore not selling them), this could mean a positive inflow into DOGE and SHIB.In turn, moving them higher.So, is this good enough of a reason to buy? Perhaps, but just as a short-term trade.An influx from retail traders cycling out of major coins may only go so far.
Long-term, Doge still needs to improve its functionality and/or gain the respect of the so-called “smart money,” for it to move to prices well above what it trades for today.
By no means consider this a “safe haven” asset.
Think twice about even making it a large position in your portfolio.Yet, as market uncertainty could counter-intuitively give it a boost in the months ahead, there may be merit entering a speculative position in Dogecoin today.
On the date of publication, Thomas Niel held long positions in BTC-USD and ETH-USD.The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines .
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