Skip to main content
You have permission to edit this article.
Should You Invest in Dogecoin in 2021?

Should You Invest in Dogecoin in 2021?

  • 0
Should You Invest in Dogecoin in 2021?

Cryptocurrencies have made quite the splash in the investing world over the last few months. Dogecoin (CRYPTO: DOGE) is a type of cryptocurrency, similar to Bitcoin (CRYPTO: BTC).

Although it's existed since 2013, it's gained popularity recently. Some people credit Elon Musk for driving up the price of Dogecoin by tweeting about it, and many retail investors are jumping on the cryptocurrency bandwagon.

Cryptocurrencies are the shiny new thing, and some investors could potentially make a lot of money. But is this alternative investment right for you?

Dogecoin: Weighing the pros and cons

Cryptocurrency, in general, is a risky investment because it can be extremely volatile. Back in January of this year, Dogecoin's price climbed nearly 400% within a matter of days. Just a couple of weeks later, its price fell from its peak by nearly one-third.

Dogecoin Price data by YCharts.

Dogecoin is especially risky because it doesn't have as much credibility as other cryptocurrencies, primarily Bitcoin. Dogecoin was created as a joke based on a meme, and it shot to popularity after investors in online communities like Reddit started promoting it.

Similar to the GameStop saga earlier this year, Dogecoin has seen its price increase dramatically, but the fundamentals haven't changed. Few businesses accept Dogecoin as a form of payment, and unless that changes, Dogecoin can't succeed over the long term. Even if cryptocurrencies in general eventually become mainstream, Dogecoin itself may or may not become widely accepted.

Dogecoin has the potential to be a lucrative short-term investment. Certainly, if you had invested in mid-January and sold at just the right moment, you could have made a lot of money.

However, short-term investing is incredibly risky, and it's a great way to lose a lot of money. Timing the market is nearly impossible, but it's even more difficult when it's a speculative investment like Dogecoin that has shaky fundamentals.

If you're not willing to hold an investment for years, it's probably not worth investing in it. Dogecoin is an extremely risky investment without a strong track record, and there's no telling where it will be a few years from now. For that reason, it's probably wise to steer clear of it for now.

A safer investment choice

Dogecoin may not be a good fit for most investors, but if you're still eager to get on the crypto bandwagon, there's a safer option: crypto stocks.

A crypto stock is a company that has a link to cryptocurrency -- either by investing in it, offering it as a type of payment, or building the technology behind it.

  • Tesla, for example, invested $1.5 billion in Bitcoin, and CEO Elon Musk recently announced that consumers can use Bitcoin to purchase a Tesla.
  • Shopify also allows its merchants to accept cryptocurrencies as a form of payment.
  • Tech company NVIDIA doesn't deal with cryptocurrencies directly but powers the computational side of the technology.

If the crypto market continues to explode, all of these companies could reap the rewards.

The key to investing in crypto stocks is to choose stocks based on the company's business fundamentals. In other words, don't invest in them simply because they're linked to the crypto market.

Good investments will be good investments, regardless of what happens with cryptocurrencies. If the crypto market crashes, solid companies should still be able to survive. This can limit your risk while still allowing you to get in on the cryptocurrency phenomenon.

Dogecoin is a risky investment that's subject to volatility, and it's not for everyone. Invest in this cryptocurrency only if you have a high tolerance for risk. And if you do, invest only money you can afford to lose. For everyone else, putting your money behind solid long-term investments is your best bet.

10 stocks we like better than Dogecoin

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Dogecoin wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of February 24, 2021

Katie Brockman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bitcoin, NVIDIA, Shopify, and Tesla. The Motley Fool has a disclosure policy.

The business news you need

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Related to this story

Most Popular


When people think of tax shelters, they sometimes think of Swiss bank accounts, shady overseas investments, or fraudulent or questionable activities by wealthy but unscrupulous businessmen. That is an unfair characterization.

The TurboTax website sums it up nicely – "A tax shelter is any legal strategy (that) you employ to reduce the amount of income taxes you owe." Obviously, anything that falls outside the legal boundaries is an illegal tax shelter and not something you want to pursue – but there are plenty of legal tax shelter options available to you.

Simply itemizing and taking all the deductions that you qualify for is a form of tax sheltering. People get into trouble by stretching the qualification rules – for example, claiming a home office deduction when the space is used for work but not exclusively for work – but if you follow the rules that the IRS outlines, you should be in fine shape. If you cannot decipher the rules and are not sure your proposed s...

Only 25% Of Americans Know This Simple Tax-Savings Trick

What are Deductions, Credits, and Exemptions?

Top 13 Ways To Cut Your Taxes


The Premium Tax Credit (PTC) may sound like it is a credit only available to top-tier incomes, but it is actually quite the opposite. "Premium" in this case refers to health care premiums, and the PTC is a way to help those with relatively low incomes to afford health insurance premiums and avoid the potential penalties (and health hazards) of having no health insurance at all. The Tax Cuts and Jobs Act removed the penalty for not having insurance (aka the individual mandate), beginning in tax year 2019; you will not be charged a penalty for failure to provide proof of health insurance for the last tax year.

Eligibility for the Premium Tax Credit

If you purchased your health insurance through the federal Health Insurance Marketplace or anyone else included on your federal tax return did so, then you may qualify for the PTC. "Credits are, in general, more valuable than deductions, because they reduce your taxes dollar for dollar," says Betterment Head of Tax Eri...

Tax Impact Of The Affordable Care Act

Retirees Not Maximizing Tax Refunds

Top 7 Tax Deductions And Credits That People Forget

The Employee Retirement Income Security Act (ERISA) of 1974 establishes minimum standards for retirement and health plans in the private sector. With ERISA, Congress enacted tax and labor standards for employer benefit plans, to protect employees. What Is ERISA? ERISA is a federal law enforcing minimum standards for most retirement and health plans in the […]

Get up-to-the-minute news sent straight to your device.