A major star in the cryptocurrency firmament earlier this week, Dogecoin (DOGE -2.07%) started to dim on Wednesday. In late afternoon trading, the high-profile meme coin was down nearly 4% in price over the preceding 24-hour period. As usual in the financial world, what shoots up usually comes down, and that dynamic was happening quickly with Dogecoin.
Dogecoin’s rocket rise at the start of the week was due mostly 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 waxed enthusiastic about Dogecoin, and the logo switch was seen as an endorsement from 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 holds. The others, not surprisingly, are go-to cryptos Bitcoin and Ethereum.
Since it is so cheap to own, as it has always traded for less than $1 apiece, many investors take a “what the heck” approach to holding Dogecoin. It’s likely that more than a few were booking quick profits after the Twitter surge, selling out as easily and casually as they bought in.
Being a low-priced meme coin with little serious utility, Dogecoin is very much a volatile item whenever there’s big news around it, like a social media logo switch or a cheerful Musk tweet on its virtues. Investors, then, should exercise great care with 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 in and recommends Bitcoin, Ethereum, and Tesla. The Motley Fool has a disclosure policy.