- Dogecoin (DOGE-USD) recently fell below the psychologically important level of 10 cents.
- Hold on tight as Elon Musk will catalyze prices higher.
- DOGE also tackles age-old issues, stay steadfast.
The news for Dogecoin (DOGE-USD) and the broader cryptocurrency market hasn’t been good lately. Market indicators Bitcoin (BTC-USD) and Ethereum (ETH-USD) were beaten. Dogecoin fell at the same pace. But investors should hold on because things are not as bad as they seem.
Bitcoin has lost over 36% of its value since the start of the year, suffering a dramatic drop over the past 2 weeks that has seen it plunge below $27,000. Ethereum has done even worse, down 47% this year.
And as these leaders evolve, so does the broader cryptocurrency market. This caused Dogecoin to drop below the 10 cent level, a price it has not traded at since bursting onto the scene over a year ago.
Dogecoin is not dead. It’s good news. The bad news is that it fell below $0.10, a level it hasn’t traded at in over a year.
Although Dogecoin has been in trouble lately, acute issues caused it to drop sharply on May 11-12. The problem was that Earth (LUNA USD) collapsed, becoming nearly worthless. It is tied to the stablecoin TerraUSD (UST-USD), which is supposed to be pegged to the dollar. However, it traded well below $1, catalyzing a selloff that rendered Terra nearly worthless.
The news is causing serious speculation and even extreme fear that a house of cards scenario is present. This causes DOGE to trade below $0.10.
But here’s the good news: Dogecoin is not a stablecoin. It is not supposed to behave the same way as the dollar. The fact that LUNA and UST have faltered is proof that designing a digital product to mimic the USD is not easy, if not possible. But that in no way means that DOGE is in mortal danger.
It’s definitely a strike against cryptocurrency in general, but Dogecoin will survive.
Powerful catalyst for Dogecoin
And Dogecoin has strong support for Elon Musk. The idea that the imminent purchase of Musk Twitter (NYSE:TWTR) will benefit Dogecoin is well established.
That means HODLers should just sit tight as this saga unfolds. Is it good for cryptocurrency? No, probably not. But this is going to serve as a sort of test for the cryptocurrency. So these coin holders are going to have to hang on no doubt. But all DOGE investors are also well aware that Elon Musk is going to do a lot to defend Dogecoin.
You’re here (NASDAQ:TSLA) accepts Dogecoin and no other cryptocurrencies. My colleague Mark Hake pointed this out in a recent article. He also pointed out that Twitter will accept Dogecoin as a payment method or its planned subscription services under its leadership, called Twitter Blue.
So, while the current news is undoubtedly negative, Dogecoin has a powerful positive catalyst waiting in the wings. Elon Musk will continue to defend Dogecoin.
DOGE also increases its usefulness. Investors have long criticized it for its narrow use cases and lack of utility. However, I recently wrote on the news that Gucci (OTCMKTS:PRUY) will accept Dogecoin as a payment method in the future.
This opens up new utility and use cases for DOGE. So, despite the negative headlines affecting the cryptocurrency market and dragging DOGE to very low levels, holders are unlikely to sell.
What to do
Dogecoin is clearly facing a significant test right now. Despite these problems, there is something to be positive about. Additionally, investors who have been caught up in this decline don’t have much choice right now. the best course of action is to hang in there and stay positive about the future of the meme coin.
At the date of publication, Alex Sirois did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.