What is dog money? Why does the market value of DOGE fall? Dogecoin was originally a meme currency in 2013, but then experienced a sharp increase in market value. Since the dog coin came into being, it has been a hot topic in the encryption community. However, its value has declined recently, causing people to worry that it may have died.

What is dog money?

Dog coin is a cryptocurrency similar to Bitcoin and Ethereum, but with some differences. For example, you can use Ethereum to create and share various applications or DApps. Similarly, you can use XRP for international asset exchange. But the dog coin was launched as a joke, but it is no longer a joke.

Secondly, the supply of all cryptocurrencies is limited. There is an upper limit on how many coins can be created. For example, the supply limit of Bitcoin is 21 million. Among them, 18.638 million pieces have been mined.

Explanation of the crash of dog coins

The crash of dog coins experienced last year can be attributed to several factors. Due to the public support of Elon Musk, dog money has landed on the moon since it was just a joke at the beginning. Elon Musk has publicly supported cryptocurrency in the past. However, since the widely publicized SNL appeared, as the participants in the encryption market seem to have lost confidence in the tokens due to Musk's emotions in the program, the value of dog coins has lost more than 75%.

The decline in the value of dog coins is also attributed to the rapid decline in the popularity of memes. The existence and value growth of meme coins is mainly due to their popularity. However, meme coins such as Dogecoin are limited due to their lack of practicality beyond the transaction function.

In the past few months, investors have liquidated their dog coins, which shows that investors have lost confidence in dog coins as a long-term asset.

Why did DOGE fall?

Encrypt winter

After a good operation in 2021, the market value of most cryptocurrencies, including dog money, increased exponentially, and the total market value of most cryptocurrencies declined in 2022. The crypto market goes through the same cycle as the stock market. Encrypted winter is equivalent to a bear market in the stock market, and asset prices fall for a long time.

Slow technological progress

Although many traders benefited from the dog coin foam, the token is considered a risk investment because of its slow development. Dog coins are rarely updated, and its official GitHub repository is not updated regularly as other cryptocurrencies. The slow absorption of this technology in its development process makes the token more vulnerable to its network manipulation.

Dogecoin network was attacked by hackers before destroying its main wallet, causing many investors to suffer losses. Due to its decentralized nature, the digital asset platform is largely not protected by the government, and many investors risk losing their portfolios. Unlike Bitcoin and Ethereum, Dogcoin is vulnerable to such attacks because its ecosystem is not regularly strengthened.

Dog money supply

Cryptocurrency is touted as a viable alternative to legal tender as a means of payment and value storage. However, what makes money valuable is that its supply should be limited; Otherwise, it will soon lose its value. For example, the upper limit of Bitcoin is 21 million coins, after which no other coins can be mined.

On the other hand, dog coins were initially proposed with a maximum of 100 billion tokens, but in the past eight years, the supply has been increasing at the rate of about 5 billion tokens per year. The token is not defined as a value store because its supply is not fixed, and more and more investors are exiting to avoid losing their investment.

Many competitors

At the beginning of the cryptocurrency competition, Bitcoin and Ethereum were the leading cryptocurrencies in the market. The economy is in good condition, and investors buy them because they follow a clear path of value creation and provide a real substitute for the official currency, without the need for banks and other institutions.

Fast forward to 2022, the cryptocurrency exchange provides hundreds of tokens, and the number of meme tokens is also increasing. As more and more investors turn to these currencies, dog coins face fierce competition from Floki inu, Shiba inu and Saitama inu.

One of the biggest competitors of dog coin is Bitgert. Due to its strong ecosystem, many investors who liquidate dog money positions are flocking to Bitgert. Bitgert uses the BRC20 blockchain to effectively eliminate the high gasoline costs associated with the Ethereum blockchain.

The era of easy money making is over

Gone are the days when newly minted coins were dug up in a few minutes. The encryption market has many similarities with other traditional assets (such as housing). Government policies such as high interest rates often prevent investors from making returns on high-risk investments.

At present, global inflation is at the highest level in history, and the Federal Reserve has taken action to raise interest rates. Even risk-averse investors have slowed their appetite for venture capital, and memes such as dog money are usually the first to be hit in this economy. In combination with the encryption winter and the loss of celebrity status, dogcoin is facing an arduous task in restoring its market position.

In general, the above content introduces in detail what dog money is and why the market value of dog money (DOGE) will fall. I believe you will understand after reading it. In a word, although dog money may be a joke at first, the dog money listed on the exchange is one of the most popular cryptocurrencies.