The cryptocurrency market was collectively sent into a massive correction over the past week. Bitcoin’s price dropped below $40K, and all altcoins followed.
Some, however, have retraced harder than others – Dogecoin copycats are bleeding out, and there are a few important things to consider coming out of this.
Dogecoin Copycats Like SHIB Tumble Hard
Less than 10 days ago, Dogecoin copycat buyers were celebrating massive gains, some in the range of five or six-figure percentage increases.
As CryptoPotato reported, there was a sudden spike in the number of coins that were imitating DOGE, which saw a tremendous increase so far in 2021. Largely propelled by retail investors who seemed to have bought DOGE as soon as Elon Musk tweeted about it, cryptocurrency is definitely this year’s hottest topic.
Shiba Inu (SHIB) was undoubtedly the one that stood out the most, as the cryptocurrency surged tremendously to a point where a simple $50 investment last year would have been worth over a million at the coin’s all-time high (reached just 8 days ago).
Now, however, all the copycat cryptocurrencies are tumbling. It’s true that the entire market is going through a serious correction. Still, the losses of these coins are much more significant and the chances of them recovering are looking particularly slim at best.
For context, let’s see how much value some of the popular DOGE clones lost since their all-time highs, most of which was reached about a week ago.
- Shiba Inu (SHIB) is down 65% since ATH.
- Dogeswap (DOGES) is down 94% since ATH.
- DogeFi (DOGEFI) is down 92.3% since ATH.
- Husky (HUSKY) is down 90.4 since ATH.
- Shiba Pup (SHIBAPUP) is down 93.2% since ATH.
These are just some of the most popular ones, but the situation is similar, if not worse, with other Dogecoin clones.
What Are The Lessons?
The first and the most obvious thing to consider is that, as much as everyone would love it, the market doesn’t go up only. It goes to corrections naturally as investors realize profits or rebalance their portfolios.
This is the main reason for which we’re seeing the current correction within the entire market. However, there’s a key difference between a correction in Bitcoin and one in copycat Dogecoin coins with absolutely no intrinsic and inherent value, created to capitalize on a temporary trend that is inevitably bound to die out.
The thing to understand is that there’s no such thing as “investing” in cryptocurrencies of this kind. There’s nothing to invest in – most of them even share the same WordPress template – that’s how little effort went into creating them.
While it’s all fun and games when the trend is hot, and prices go up, it’s also important to remember that trading is a zero-sum game. This means that in order for someone to buy, another one has to sell. Most of the time, most investors with little to no understanding of the market (which is the majority of retail) tend to buy near the top – that’s when the trend is at its peak and when people usually get to know about the specific cryptocurrency.
Once the markets start to tank, however, those coins with no fundamentals are unlikely to recover. So what usually happens is people ending up with large bags of coins that are likely never to get back to their entries, let alone make a profit.
In any case, the key points here would be not to invest in assets without solid fundamentals, to be very careful when riding an obviously short-term trend, as well as to do proper research and steer clear from scams.