Dogecoin Canada – It certainly doesn’t need to be said, but 2022 was a difficult year for cryptocurrency investors. Strangely, during the past three years, cryptocurrency Dogecoin (CRYPTO: DOGE) has remained one of the market’s most profitable investments. Three years ago, if you had invested $10,000 in it, it would now be worth a staggering $327,000!
Dogecoin Price
When you consider that Dogecoin’s price fell by 60% in 2022, that is rather impressive. Dogecoin Should investors thus stock up for the upcoming crypto bull market? I’ll go about what ultimately determines token pricing, how recent developments have changed the cryptocurrency market, and why investors should have realistic expectations.
Why was Dogecoin launched to the moon?
Despite being a satirical joke coin, Dogecoin’s value has skyrocketed in recent years. Millionaires were created by cryptocurrencies in a short period of time. And even while it’s far from its previous highs, as the chart below illustrates, it still remains substantially above pre-2021 values. What then led to it? Cryptocurrency values are determined by supply and demand, and in 2021, when markets were quite positive, the coin became widespread. Investors rushed to it, especially when Elon Musk, who continues to do so today, openly supported the coin. Fear of missing out, or FOMO, was prevalent among investors.
The lost struggle of Dogecoin with supply and demand
I’ll reiterate, at the risk of seeming repetitive, that supply and demand determine how much a cryptocurrency will cost. Prices rise when people desire something and fall when they don’t, to put it simply. This perspective raises several questions about Dogecoin.
In contrast to several other cryptos, Dogecoin does not have a supply cap. For instance, there will never be more than 21 million Bitcoins available. Knowing something is rare makes it much simpler to justify paying extra for it. Nevertheless, Dogecoin has an endless supply, with an addition of around 5 billion coins per year, thus there are roughly 10 billion more coins in use today than there were when it peaked.
The environment has altered
The environment surrounding cryptocurrencies has undergone a significant transformation during the past two years. Investors are now impoverished and looking for answers after a number of cryptocurrency exchanges, including BlockFi and FTX, crashed and went bankrupt. Hence, it is not only necessary for investors’ risk appetite to return, but it may also take time for the Bitcoin ecosystem’s trust to do so. It is difficult to envision a market as frantic as the one we witnessed in 2021 before that time.
It could be challenging to replicate the returns investors experienced with Dogecoin since they were like “lightning in a bottle.” Due to its always-growing supply, Dogecoin is inherently faulty as a currency, and the right kind of demand isn’t present to offset this and raise prices. Investors must deal with the coin.
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