Prediction: This cryptocurrency is about to go parabolic. Here’s why investors should avoid it like the plague.

In recent years, cryptocurrency has emerged as one of the most popular asset classes among alternative investments. In particular, Bitcoin and Ethereum are two top options in the cryptocurrency field.

But like any type of asset, investing in cryptocurrencies comes with risks. Namely, meme coins like Shiba Inu and Dogecoin (DOGE -3.73%) they attracted substantial attention but left unsophisticated investors holding the bag at the worst possible time.

Let’s take a closer look at Dogecoin, why I think its price could be on the verge of going parabolic, and most importantly, why investors should avoid it like the plague.

What is Dogecoin?

From the outset, it’s important to state that cryptocurrency has so far not lived up to its billing as a form of payment. While Bitcoin and Ethereum have some real-world utility, neither should be considered a primary trading medium.

Dogecoin is even further removed from utility. The coin was the creation of two software engineers in 2013 and was essentially a joke. Thanks to fun marketing, a cute logo and support from online communities RedditDogecoin started to gain attention.

Like many cryptocurrencies, Dogecoin can experience extreme price volatility. However, given that the meme currency does not have widespread application in the real world, its value tends to be determined by the ephemeral sentiment of investors. Social media has served as an influential medium affecting Dogecoin’s price and popularity, and a recent remark by Elon Musk makes me suspect that Dogecoin’s price is about to go parabolic.

Image source: Getty Images.

Why Do I Think Dogecoin Is About To Moon?

The reason for my perspective has to do with Musk’s relationship with former president and current Republican presidential candidate Donald Trump. In recent days, Trump has teased the idea of ​​picking Musk for a Cabinet position if he wins the November election. Specifically, Trump toyed with Musk leading a spending and budgeting effort colloquially known as the office of government efficiency.

Well, Musk seems to be aligned with that vision and over the weekend he posted the following image on X (the social media platform formerly known as Twitter).

Department for Government Efficiency pic.twitter.com/HFeHYNIkJN

— Elon Musk (@elonmusk) September 7, 2024

do you see him In the image, the letters “DOGE” serve as an acronym for “Department for Government Efficiency.”

This would be borderline hilarious if the letters weren’t also the ticker symbol for Dogecoin. Oh, and let’s not forget that Musk has previously given some signs of support for Dogecoin, going so far as to propose the idea of ​​accepting Dogecoin as a means of payment at his electric vehicle (EV) company, Tesla. Since posting, Dogecoin is up as much as 10%.

Look, but don’t speculate

It wouldn’t shock me at all if the price of Dogecoin continues to rise after Musk’s whimsical social media post. It doesn’t strike me as a coincidence that just days before Musk’s post, he and Tesla won a dismissal of a lawsuit alleging he misled investors over his enigmatic backing of Dogecoin.

The big picture is that even if Trump wins the election and actually puts Musk in his cabinet, it doesn’t not validate Dogecoin in any way. The two ideas are completely disconnected. For this reason, I think investors are much better off watching Dogecoin’s price action, rather than buying it on speculation that it could be a long-term winner in your portfolio. My sense is that any Dogecoin price rally leading up to the election will be short-lived and the crypto is best avoided.