Let’s take a walk down memory lane.
Last weekend my greyhound and I visited our local dog park. We went straight to the Shiba Inu meeting.
“Hey yeaaaadd … Get me out of here.”
If you feel this way Dogecoin (CCC:DOGE-USD), I don’t blame you either. In our highly unscientific InvestorPlace.com According to the survey, 51% of respondents now view Dogecoin as old news (Boomer coin perhaps?)
Instead, you have alternatives such as Shiba inu, Snoop doge, and of course Australian safe shepherdAlso known as “ASS Coin”.
Many of these tokens are bought for the same reason that stocks Clover Health (NASDAQ:GLEV) did yesterday. They are cheap. Some may be minting quadrillions of tokens just to guarantee a low price per coin.
And some of these coins are doing well. So, if you’re bored with cryptocurrency too, this is Moonshot’s new investment today.
Ctrl-Alt-Doge: Looking for the next Dogecoin
I noticed last week that cryptocurrencies are very similar to rail networks. The most extensive, like Binance (CCC:BNB-USD), these are exchanges (railway stations), protocols (railway tracks) and tokens (cars) all rolled into one. This is how the $ 1,000 invested in BNB in 2017 would grow to $ 3.7 million today.
Meanwhile, the Doge altcoin contenders in the first place tokens… (Think of them as a galley in the investment world.) These tokens operate on existing networks like Binance and solely serve to transfer money from one side to the other.
If you are Ethereum (CCC:ETH-USD) founder Vitalik Buterin, that’s great news. These tokens not only strengthen your network. Sometimes you receive billions of dollars as a gift.
For the rest, these are lottery tickets. There are so many of them – 965,900 tokens at last count – and only a few are generating excess profits.
- Quadrillion Club. Tokens like SafeMoon they have so many outstanding coins that prices are tracked by how many decimal places they gain or lose. Most of the Inu clan falls into this group: Shiba Inu, Alaska Inu, Jindo Inu, Sanshu Inu, Kishu Inu, Akita Inu, Hokkaidu Inu, Keanu Inu, Tsuki Inu as well as CoShi Inu are among the many dog breeds available for adoption.
- r / WSB Immigrants. Though Reddit’s r / WallStreetBets bans any talk of cryptocurrency, which hasn’t stopped their fans from joining the Doge craze. Tokens like FEG token (Feed every gorilla) together HODL as well as Tendies…
- Indecent exposure. If you’re going to offend Wall Street, why not make the media flinch when they mention your name? CUMROCKET, PORNOROKET, BongWeedCoin as well as Save your assets are some of the many who happily accept their sh * tcoin status.
- Overcompensation. At the other end of the spectrum are symbols of wellness such as GreenTrust who promises to plant trees later. Most of these tokens do not have specific plans, but this is usually enough to attract investors.
So which one is the best to buy?
My suggestion is simple. Buy top performing coins of the last month and hold for one week.
Here’s what would happen if you did it in April.
An investor who bought the most profitable coins at the end of April would have received 50% profit by the second week of May.
But hold out longer, and your gains will melt away quickly. Here’s the same graph showing only average income.
Special Mention: Clover Health
It’s hard to miss Clover Health lately.
“This is one of the easiest investments I’ve ever made,” Chamat Palihapitiya said at the time.
If he meant price, he is right. The merger of Clover Health / Social Capital III resulted in one of the few SPACs that fell in price. below level up to $ 10.
But if he was talking about Clover’s business, he might have taken the wrong S-1 off his desk. Clover’s business drivers are even more complex than Clover’s. Palantir (NYSE:PLTR), another Reddit favorite. Instead, it looks a lot like Optum or Bright Health – complex insurance companies that live and die according to the formulas that determine their star ratings. (Seniors who can afford these plans rarely buy poorly rated plans.)
From this point of view, Clover Health is fighting a tough battle. The 3-star Medicare Advantage (MA) rating puts it in lowest rate of health insurers in its main market; instead, the firm relied on aggressive marketing for clinicians to promote its product.
In other words, they will try to convince your doctor to sell you the plan by giving them a big discount. The Justice Department appears to be investigating.
However, Clover’s growth reminds us that Reddit investors don’t really care about how ethical their investments are. If it’s cheap, it’s a buy.
Fall to Earth: Boomer Coins
Let’s go back to cryptocurrency. Investors are likely to look back to mid-2021 as a time when our remnant of common sense has evaporated. Technologically advanced coins like Ethereum, Cardano (CCC:ADA-USD) as well as Dotted (CCC:DOT1-USD) is no longer in the top 10 most viewed coins on CoinMarketCap, a popular cryptocurrency tracking website.
They were replaced by alt-dogs.
Turns out retail investors incredible disciplined when it comes to avoiding losers. Last month, the $ 10,000 invested in the coins in the left column would have dropped to $ 7,700. Meanwhile, June rockets to the moon would have turned $ 10,000 into $ 241,000.
Retail investors are a remarkably self-aware group. If it doesn’t bring you a quick return, it’s best to go ahead and try another way to lose money.
In numbers: Cryptomania Ahoy!
|eight%||Percentage of Americans who owned cryptocurrency in 2018. Most Americans were either not interested or considered cryptocurrency too risky.|
|17%||The percentage of Americans who own cryptocurrency today, according to a New York Digital Investment Group survey.|
|USD 111,000||Average salary for cryptocurrency investors according to Gemini Crypto Exchange research.|
|$ 860 billion||General fortune earned by crypto investors since January 2021.|
On Monday I highlighted Ford (NYSE:F) for a potential rating upgrade. Now it was the turn of Louis Navelier and his team to explore the great potential of the automaker in detail.
Tesla (NASDAQ:TSLA) there is a new fan! Joanna Macris is exploring how an electric car manufacturer’s charging stations can hinder the growth of new entrants.
Mark Hayk identifies an underrated competitor to streaming wars in his new industry analysis.
El Salvador will be the first country to accept Bitcoin (CCC:BTC-USD) as legal tender. The law obliges every business to accept cryptocurrency for payment. Time will tell if this massive experiment works as intended.
Final thoughts: the never-ending cycle of hype
All hype cycles seem to go through similar phases.
Consider the shares of memes. In the early stages, we will see promising improvements such as GameStop (NYSE:GME) as well as AMC (NYSE:AMC) to achieve success. As the share price of the leader rises, second-tier firms love Microvision (NASDAQ:MVIS) as well as Workhorse (NASDAQ:WKHS) let’s start riding the folds. Finally, the mini-bubble bursts, leaving the original meme stocks (like GME / AMC) as the winners.
Cryptocurrencies are in phase 2 of this cycle. Many of these alt-Doge coins don’t even pretend to have a purpose; if they can get enough attention for early investors to cash out, that’s enough for them.
But eventually the situation will change. As alt dogecoins fizzle out, investors will return to the original Shiba Inu coin.
Keep track of Dogecoin prices. The moment it starts to grow significantly, don’t be surprised if # DogeCointo1Dollar roars back to the summer days of the Doge.
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Thomas Jung is an expert at finding fast growth opportunities on Reddit. He recommended Dogecoin before it skyrocketed more than 8000%, Ripple before it skyrocketed over 480%, and Cardano before it skyrocketed 460%. Now, in a new report, he names 17 of his favorite Reddit penny stocks. Get your FREE COPY here!
As of the date of publication, Tom Young did not have (directly or indirectly) any of the positions in the securities referred to in this article.
Tom Young, CFA, is a Registered Investment Consultant with a mission to simplify the world of investing.