Dogecoin is making headlines after President-elect Donald Trump announced the creation of the Department of Government Effectiveness on X last Wednesday.
This meme coin was worth 16 cents Election Day and has since more than doubled to a peak of nearly 39 cents on November 14. However, according to CoinMarketCapits value is still less than half its all-time high of nearly 69 cents in May 2021.
This unofficial department shares the same acronym as the cryptocurrency: DOGE. Trump announced that this new advisory department would be led by Elon Musk and Vivek Ramaswamy, a former Republican presidential candidate. Its stated aim will be to seek ways to reduce public spending in order to “drive large-scale structural reform”.
This department does not yet exist and is unlikely to be launched as an official government department. Creating an official government department requires an act of Congress.
Learn more: How Trump’s election victory could help Elon Musk’s Starlink
What does all this have to do with dogecoin?
Musk has been a big supporter of dogecoin over the years. Amid the post-election stock market boom, Musk’s new position as co-head of DOGE sent the cryptocurrency soaring on Wednesday. It has remained high with slight fluctuations since.
“The appointment of Elon Musk as head of the Department of Government Effectiveness, i.e. DOGE, has catalyzed investments in Dogecoin,” said Andrew Lunardi, digital currency expert and adoption manager on-chain at Immutable, a crypto asset gaming company.
Musk’s tweets and public statements helped increase the value of dogecoin in the pastand investors and experts like Lunardi expect this trend to continue if Musk promotes cryptocurrency more in the future.
Dogecoin peaked in May 2021 and then fell significantly. The value of this cryptocurrency has remained relatively stable since the summer of 2022, until seeing an uptick in the spring of this year and has since soared.
Cryptocurrency values ​​for other digital coins have increased since Trump’s presidential victory last week. In July, Trump announced during a Bitcoin conference that he wants to make the United States the “crypto capital of the planet”.
Should I invest in dogecoin, bitcoin or other cryptocurrencies?
Investing in cryptocurrencies can be risky. This is a very volatile investment vehicle. If you want to explore cryptocurrencies like dogecoin or bitcoin, investment experts emphasize researching the market and never investing more than you are willing to lose.
“Bitcoin (and other cryptocurrencies) has been on a wild ride in recent years, but just because it hit an all-time high after the election doesn’t mean investors should suddenly change their strategy,” he said. said Alex Michalka, vice president. president of investment research at Wealthfront, an investment platform.
Diversification your wallet to help reduce your risk is also generally recommended. If you don’t want to experiment with direct crypto investing, you may want to consider investing a small portion of your portfolio in crypto exchange-traded funds. It is always advisable to consult a trusted financial advisor before changing your investment strategy.
“I encourage investors to consider cryptocurrency as just one type of asset class that you could include in your long-term wealth creation strategy,” Michalka added.
Why is crypto so volatile?
Cryptocurrencies like dogecoin and bitcoin do not have fully established valuation methods like other stocks and investments. Instead, the price increases mainly because of hype. We saw crypto hit all-time highs just to falling to dramatically low levels shortly after. This makes this asset class extremely risky.
“The crypto market has never been a good place to invest. But at times it has certainly been a profitable place to speculate,” said Robert R. Johnson, a finance professor at Creighton University.
If cryptocurrency becomes easier to value and adoption is wider, Lunardi suspects this digital currency will become less volatile. But for now, he cautions that it remains a risky asset class.