Maybe no property captivated traders’ consideration this yr greater than Dogecoin (CRYPTO:DOGE) and SafeMoon (CRYPTO:SAFEMOON). Previously 12 months, Dogcoin is up a surprising 6,100%, whereas SafeMoon shot up a staggering 647,300% since its inception on March 9, 2021. Even a small funding within the two, for instance as little as the quantity on a stimulus test, would have created millionaires. Take into accout, these progress figures are after factoring within the plunges of about 80% from their all-time highs in Might.
Given the sharp progress charges, many traders could also be considering of shopping for the dip, considering the rally could resume as soon as extra. This is why that is a horrible thought.
Is Dogecoin secure?
Dogecoin is a horrible long-term funding on account of a easy motive: inflation. Every year, about 5 billion doge cash are created out of skinny air and launched into its current 130.5 billion provide with no higher restrict. This principally ignores your complete enchantment of cryptocurrencies, which magnetize traders who’re fed up with the centralized and inflationary nature of fiat currencies. There are additionally no distinguishing options to the meme forex. That mentioned, the coin appears due for a useless cat bounce within the brief time period.
One can thank Tesla‘s (NASDAQ:TSLA) CEO Elon Musk for that. Musk’s assist for Dogecoin has triggered it to achieve recognition amongst distributors. In consequence, there at the moment are over 1,461 retailers worldwide that settle for it — up from simply 50 two years in the past. The upper the variety of customers buying and selling the coin, the better the worth of the community, which may offset inflationary pressures within the brief time period.
However Dogecoin at present has a market cap of $26.8 billion, so except retailers start quickly adopting the coin as a type of fee en mass, the coin’s elementary worth will not be going up in the long run. So on the finish of the day, Dogecoin is simply one other low-utility, high-supply coin traders ought to keep away from.
What about SafeMoon?
In case you thought Dogecoin was dangerous, SafeMoon is even worse. There are few, if any, retailers at present accepting this digital forex. What’s extra, the coin has turn out to be the top of the cryptocurrency bubble, much like BitConnect a number of years in the past. As its identify suggests, SafeMoon was created totally to solicit preliminary coin providing (ICO) traders to promote to new patrons at a better value. “Going to the moon” is a well-liked monetary lingo that refers to an asset skyrocketing in value in a really brief period of time.
The coin has caught the eye of many “crypto-influencers” who’re “pumping and dumping” it. This comes from its deceptive value design. At present, every coin prices about $0.000002642 (and falling), and influencers have a tendency to make use of rhetoric corresponding to “you will be a multi-millionaire if the value hits simply $0.01” to solicit new traders. The one downside is that SafeMoon at present has a market cap of $2.633 billion — that means that the coin would have a market cap of round $10 trillion at $0.01 per coin. So even when influencers in some way solicited everybody on Forbes’ World’s Billionaire Listing to dump all their internet liquid financial savings into the coin, it is uncertain that the value might transfer there.
There aren’t any constructive distinguishing options related to SafeMoon that differentiate the coin from the ten,957 different cryptocurrencies on the market. In truth, the SafeMoon community imposes a ten% “tax” on all transactions on prime of alternate charges, making it slightly unusable. What’s extra, SafeMoon is constructed on a proof-of-authority mechanism, with block creators chosen by cryptocurrency alternate Binance. The entity has lately gotten into hassle with U.S. and U.Ok. regulators for missing correct credentials in brokering investments. Total, I see SafeMoon going nowhere however down within the close to future. It is positively a cryptocurrency to keep away from.
This text represents the opinion of the author, who could disagree with the “official” advice place of a Motley Idiot premium advisory service. We’re motley! Questioning an investing thesis — even one in every of our personal — helps us all suppose critically about investing and make choices that assist us turn out to be smarter, happier, and richer.