Why Dogecoin Was a Shaggy Dog of a Crypto Today

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What happened

A major star of the cryptocurrency firmament earlier this week, Dogecoin (DOGE -3.86%) began to darken on Wednesday. By late afternoon, the price of the highly hyped meme coin was down nearly 4% in the previous 24-hour period. As usual in the financial world, what goes up usually comes back, and this dynamic was happening quickly with Dogecoin.

So what

Dogecoin’s surge earlier this week was mainly due to its logo – a bug-eyed Shiba Inu dog – replacing Twitter’s traditional blue bird logo on the hugely popular messaging service. Twitter CEO Elon Musk has often raved about Dogecoin, and the logo change has been seen as an endorsement by him, Twitter as a company, or both.

In fact, the quirky Twitter (and Tesla) leader once revealed that Dogecoin is one of only three cryptocurrencies he owns. The others, unsurprisingly, are must-have cryptos Bitcoin and Ethereum.

Since it’s so cheap to own, as it’s always traded for less than $1 each, many investors take a “what the heck” approach to owning Dogecoin. It’s likely more than one made quick profits after Twitter’s surge, selling as easily and casually as they bought.

Now what

Being a low-cost coin with little serious use, Dogecoin is a very volatile item whenever there’s big news around it, like a social media logo change or a happy tweet from Musk on its virtues. Investors should therefore exercise a high degree of caution towards it and keep firmly in mind that it continues to be a highly speculative asset.

Eric Volkman has positions in Bitcoin and Ethereum. The Motley Fool has positions and recommends Bitcoin, Ethereum and Tesla. The Motley Fool has a disclosure policy.

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