-
Here's Why Dogecoin Plunged 4.5% Today
Key Points
Dogecoin (CRYPTO: DOGE) is one of the quickest decliners in a very red cryptocurrency market today. This token has declined 4.5% over the past 24 hours, as of 3:15 p.m. ET, despite bouncing off an intraday low that had brought this top meme coin down by more than 5%.
Even for a meme coin, I'd argue that this move is substantial. That's because Dogecoin is still the ninth-largest cryptocurrency by market capitalization and is widely considered a fairly accurate sentiment gauge for digital assets more broadly.
Let's dive into what may have shifted with Dogecoin's investment thesis today, or if this is another run-of-the-mill market sell-off investors shouldn't pay too much attention to.
Market weakness isn't the only story for Dogecoin today
Yes, broader market weakness is something we need to factor into our analysis of today's dismal performance for Dogecoin. The wider cryptocurrency market declined by 2.9% over the past day, so about half of Dogecoin's move can likely be explained by broad-based selling pressure.
Much of this weakening sentiment can be attributed to yesterday's jobs report, which showed the U.S. unemployment rate surging yet again in November to 4.6%, its sixth consecutive month of 0.1% increases, and the highest unemployment level in years. Off of this year's low in January of 4% and a 4.1% level in June, that's a significant move. If we do see unemployment continue to rise, concerns about the availability of speculative capital to flow into tokens like Dogecoin are indeed meaningful.
Despite large investors scooping up 138 million DOGE tokens yesterday, investors appear to be paying closer attention to the weakening fundamentals around active monthly users and Dogecoin's total value locked (TVL). Both metrics have continued to decline, with monthly active users near the lowest levels we've seen in roughly six months, and Dogecoin's TVL sinking from around $26 million in September to under $13 million today.
Those are numbers that suggest previously robust user growth and invested capital within the Dogecoin ecosystem are deteriorating. In other words, Dogecoin's move today may have more to do with its own fundamentals than its use as a gauge of market sentiment.
Should you invest $1,000 in Dogecoin right now?
Before you buy stock in Dogecoin, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Dogecoin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $509,955! Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,089,460!
Now, it’s worth noting Stock Advisor’s total average return is 968% — a market-crushing outperformance compared to 193% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
This article has been published in fool.com via Yahoo News.
Here's Why Dogecoin Plunged 4.5% Today
It's not just sentiment that's declining for Dogecoin today.
finance.yahoo.com
