Search ForexCrunch

The godfather of cryptocurrencies Elon Musk, after an unsuccessful pirouette with Bitcoin, turned his attention to a new project: “Baby Doge, doo, doo, doo, doo, doo …”

What BABYDOGE is up to?

The pump is an information hype and pumping prices of low-liquid assets. Due to small trading volumes, sudden large purchases cause a rise in prices, after which a crowd of speculators joins the ride. As the price rises, the manipulator dumps the purchased assets, making money on an artificially created trend. Aftermarket saturation, when the influx of buyers dries up, the price often returns to its original levels.

Coingecko: BABYDOGE chart
Coingecko: BABYDOGE chart

Can it be another trap for speculators?

Elon Musk was already suspected of pumping Bitcoin and Dogecoin. For example, former SEC (Securities and Exchange Commission) analyst Mark Powers urged the regulator to check his crypto-tweets for abuse of trust since such statements can lead to multi-million-dollar losses of common users and among former Musk fans, the #stopelonmusk movement emerged.

Elon Musk is a controversial personality. As he continued to praise Dogecoin after abandoning Bitcoin, both coins use the principle of Proof of Work (PoW), require the participation of miners, and, accordingly, are not environmentally friendly.

Elon pumps BABYDOGE: the coin gained 500% in two weeks, and the trading volume rose too high after his tweet.

Elon Musk tweets BABYDOGE
Elon Musk tweets BABYDOGE

The success of Dogecoin led to the emergence of hundreds of clones, which is why any meme tokens were banned in Thailand since they have no meaningful basis and are dependent on the influence of media personalities. The concerns of the official authorities are not unfounded: from the May highs, when Elon Musk was in shock, Dogecoin is trading almost three times cheaper.

The new clone has low commissions, and 5% of each commission on the network is distributed among the coin holders. However, one billionaire’s tweets aren’t enough to make BABYDOGE (22 days old) a really popular project.

Should you really invest in BABYDOGE?

Experts recommend two factors to check before investing in any cryptocurrency. They are the use of cryptocurrency and its objective. The second is the daily coin turnover and its market cap. Although these two factors are by no means exhaustive, they can still give users an idea of “‹”‹whether it is worth investing in a cryptocurrency or not.

At the first point, Baby Doge hits its first red flag. According to reports, this is a meme coin created as a joke based on another memo coin. Former Musk’s beloved Dogecoin recently hosted a record-breaking contest at the invitation of SpaceX and Tesla CEOs that required people to invest in Dogecoin – even before he said Dogecoin was the “future.”

However, these one-person meetings have nothing to do with capital or the value of material resources. Therefore, they are the worst form of investment if they open the door to infinite volatility. You can win unexpectedly, but you can also lose everything in minutes. Since the Baby Doge has even fewer numbers, its volatility is even greater.

Looking to trade forex now? Invest at eToro!

67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.