When it comes to cryptocurrencies of all kinds, financial professionals advise caution.
After all, any asset that could appreciate in value simply from a mention on a prime-time TV show or social media thread is worth pausing to think about it before pressing the button ” buy “.
Laith Khalaf, financial analyst at AJ Bell, says: “Dogecoin in some ways embodies cryptocurrency, having started as a joke, and now finding itself increasing in value. This shows how difficult it is to accurately predict which cryptocurrencies, if any, will end up staying the course.
“This kind of casual, carefree approach to life is quite commendable in the context of a little fun, but it is not such a good companion for sound financial planning.
Susannah Streeter of Hargreaves Lansdown is also cautious: “Investors should be extremely careful before getting drawn into this herd mentality, as Dogecoin is largely a speculative bet whose valuation has no reliable basis.”
“Demand came from traders trying to ‘game’ the system and others hoping to benefit from future price increases rather than using the coins as a medium of exchange. It is very difficult, if not impossible, to predict when demand will subside and prices will begin to fall.
And, as with many trendy investment opportunities, from the tulip fever of the 1630s to the dot-com bubble of the early 2000s, there’s also a fear-of-missing-out factor.
Whatever you decide, financial experts say you should only invest what you can afford to lose.
This article does not constitute an endorsement of any particular cryptocurrency, broker or exchange nor does it constitute a recommendation of cryptocurrency or CFDs as an investment class. Cryptocurrency is unregulated in Australia and your capital is at risk. Trading contracts for difference (CFDs) is riskier than conventional stock trading, is not suitable for the majority of investors and carries a risk of partial or complete loss of capital. You should always consider whether you can afford to lose your money before deciding to trade CFDs or cryptocurrencies, and seek advice from a qualified financial advisor.