On Wall Street, green is the new gold. Green means that the value of an asset is going up. Many people think that being green means making money on their investments. In the first quarter of 2021, Dogecoin’s value skyrocketed, making it the most valuable cryptocurrency by a wide margin.
Though many in the cryptocurrency community see it as nothing more than a joke, Dogecoin (DOGE) is a cryptocurrency that was developed utilizing code from Litecoin (LTC), Bitcoin (BTC), and the Bitcoin fork Lucky Coin. DOGE was made to poke fun at the hype around Bitcoin, but after a Shiba Inu was put on a crypto coin, it became a lot more popular.
Dogecoin’s price is expected to fluctuate temporarily, according to crypto analysts. Is there any way to benefit from the current market conditions? The answer to the question is “yes,” and you can do that by shorting Dogecoin.
Everything you need to know about shorting Dogecoin, from the basics to advanced methods, is covered in this article.
What’s Dogecoin?
Dogecoin is a kind of digital currency developed in 2013 by software developers Jackson Palmer and Billy Markus. Palmer wrote on Twitter that he was thinking about making a cryptocurrency based on the Shiba Inu “doge” meme.
After seeing Palmer’s tweet, Markus decided to create Dogecoin on his own. Since Dogecoin itself is a fork of Lucky Coin, a fork of Bitcoin, it is not vague to argue that Dogecoin is based on Bitcoin’s code.
Markus was able to quickly modify the core components of Bitcoin’s original source and create Dogecoin. Creating and releasing Dogecoin required just three hours of Markus’ time. Shortly after that, Palmer joined the project.
Dogecoin became very popular quickly because it was cheap and had a meme-like feel to it. Reddit even added a way for users to reward each other with DOGE, and Tesla CEO Elon Musk has tweeted many times about how great Dogecoin is. Many investors now use DOGE to pay for products and services online.
Dogecoin, like Bitcoin before it, is a proof-of-work (PoW) cryptocurrency, meaning that transactions need to be validated by a network of “miners.” To further make light of the serious business of cryptocurrency mining, Dogecoin refers to its miners as “diggers.”
What Exactly Does it Mean to “Short” Dogecoin?
When you “short” Dogecoin, you are betting that the price of meme coins will go down. The institutional market and the spot market both make it difficult to do this task, but fortunately, there is a market that is called CFDs.
In “short” Dogecoin is to sell the cryptocurrency to another party with the intention of purchasing it back at a later date, when its value has dropped.
In traditional finance, if you want to sell assets or stocks to another trader, you have to borrow them first. For instance, if you “short” Dogecoin at $0.24 and close the trade at $0.20, you will have profited $0.04 per coin. On the other hand, if the price goes up, you lose the trade.
How to Short Dogecoin
The point of shorting Dogecoin is to make more money by using things you don’t have. So, how do you get there? Okay, now let’s get into the nitty-gritty of shorting Dogecoin.
Step 1: Open a Trading Account
Before you can short Dogecoin, you need a trading account. You may short Dogecoin on several of these exchanges:
- Binance
- Bitfinex
- ByBit
- Coinbase Pro
- Kraken
Basically, the very first step is to sign up for one of these cryptocurrency trading platforms and make an account. For this article, we will be using Binance to show how to short Dogecoin, in pictures.
Step 2: Go to Futures
If you want to bet that the price of Dogecoin will go down, you will need to purchase Tether coins (USDT) to use in your futures contract.
Simply enter “DOGE” into the search box.
Click the DOGE/USDT perpetual option.
Then, set your leverage size. The higher the leverage the riskier the trade can be.
The next step is to fill out your order. You can use Limit Order to target a specific price or Market Order to execute the trade immediately/current price.
After that, you may need to set your Stop Loss or Take Profit prices. This can be also done or edited when the trade is live.
When everything is set, you can then click on the Sell/Short button to execute the trade.
Note: If you don’t have any USDT in your account, you can always buy USDT by swapping Bitcoin or other assets.
Step 3: Confirm Your Doge Short is Live
Your next step, after clicking the Sell/Short button is to confirm whether the trade is actually live, by going to the Open Order section (if you used Market Order) or Positions Section (if you used the Limit Order).
Dogecoin Price Analysis
There are two approaches to analyzing Dogecoin price movements: technical and fundamental analysis. Many investors use both fundamental analysis and technical analysis to decide what to invest in, but Dogecoin has no basis for fundamental analysis.
This is due to the fact that Dogecoin operates on hype. However, despite the low acceptance rate of this currency, even a simple tweet or Instagram mention might cause large price increases. As of 2022, there are fewer than 500 places around the world where you can use Dogecoin.
For this reason, technical analysis is preferable since it reveals the presence of market psychology. You can use basic support and resistance as well as simple trend lines and moving averages of price over time.
When it comes to breaking news, you should know that when a company says it will accept Dogecoin, the price goes up, but only for a short time. But whenever things settle down in the market, short-term opportunities arise.
