Dogecoin vs. Bitcoin: Which Crypto to Buy on the Dip?

Both Dogecoin and Bitcoin have come down quite a bit from their recent peaks. If you want to buy the dip, it’s important to figure out which crypto to start with.

| More on:
question marks written reminders tickets

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Whether you are a stock investor or you delve into the thunderous waters of crypto investing, you probably understand the value of a dip. Buying at the dip and cashing in your profits at the peak has been the tried and tested practice for making the best of an asset’s short-term growth potential. But the problem is that buying on the dip also comes with a decent amount of risk.

And the risk is that the asset (whether a stock or a cryptocurrency) might not bounce back from the dip within the time frame you’ve projected for recovery. The risk is relatively higher for cryptocurrencies that are not just speculative in nature, but also subject to regulatory scrutiny throughout the world. A major stance by one of the largest economies in the world against a cryptocurrency can bury it in obscurity.

But if you believe that the crypto is sure to make a recovery and it has dipped as much as it was going to, which crypto should you invest in, Dogecoin or Bitcoin?

Dogecoin vs. Bitcoin

Apart from the fact that Elon Musk has a bit of influence in the rise and fall of both these cryptocurrencies, Dogecoin and Bitcoin have relatively little in common. Bitcoin is as legit as a cryptocurrency can possibly be. As literally the first crypto in the world, Bitcoin can be considered a pure breed.

Dogecoin, on the other hand, started out as a joke that actually got out of hand. At one point, its market capitalization reached over $85 billion. While most of the serious investor attention for Dogecoin comes from Elon Musk’s love for this particular crypto, he is allegedly even working with some developers to improve Dogecoin.

Bitcoin, on the other hand, is facing trouble from multiple ends. With Musk now worried about Bitcoin mining’s sustainability and the Chinese government cracking down on the crypto, Bitcoin would have gone down farther, but somehow, the currency is holding on.

If we assume that both Bitcoin and Dogecoin will reach their valuation goals by the end of 2021, with one reaching US$100,000 and the other US$1 for the first time ever, which one should you choose? The probability of Bitcoin growing to its target mark might be slightly higher than Dogecoin.

Bitcoin ETF

If you are rooting for Bitcoin’s recovery and want to invest in this over expensive crypto via relatively affordable means, 3iq’s Bitcoin Fund (TSX:QBTC.U) might be the way to go. The fund has been tracking Bitcoin’s value quite faithfully. The Canadian variant of the fund fell down about 28.7% in the last 30 days, which is quite close to Bitcoin’s dip.

The fund is trading at $52.7 per share at writing. The benefit of investing in this fund instead of the actual currency is that you gain exposure to Bitcoin’s volatility and explosive growth potential and you can enjoy it in a tax-deferred account. The management fee for this particular fund is relatively higher.

Foolish takeaway

If you are planning to invest in crypto and buying the dip, there are several other options. Ethereum has just started to recover from a serious dip, and so has Binance Coin. The cryptos that gain the most spotlight might also be suspect to the most volatility in the market, and if you want to leverage the growth potential of crypto, you should start looking into some other currencies as well.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned.

More on Tech Stocks

clock time
Tech Stocks

Now’s the Time to Load Up the TFSA With These 2 Top TSX Stocks

Here are two top TSX stocks that long-term growth investors may not want to give up on, especially at these…

Read more »

shopping online, e-commerce
Tech Stocks

Shopify (TSX:SHOP) Stock Recovers 30% From its 3-Year Lows: Should You Buy?

Shopify stock: Should you buy the dip or wait for more weakness?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Tech Stocks

What Market Correction? 2 High-Growth Tech Stocks That Are on the Rise

I don’t think it will be long before these two Canadian tech stocks are back to delivering market-crushing returns.

Read more »

grow dividends
Tech Stocks

Why Kinaxis (TSX:KXS) Stock Jumped 14% Last Week

Kinaxis Inc. (TSX:KXS) stock popped over the past week after adding yet another big company to its impressive stable.

Read more »

potted green plant grows up in arrow shape
Tech Stocks

TFSA Investors: Double Your Investments With These 3 Top Growth Stocks

Despite the volatility, I am bullish on these three stocks, given their solid growth potential.

Read more »

Arrow descending on a graph
Tech Stocks

2 Industries That Saw the Worst Decline Last Month

The TSX has been declining at a sharp angle since the beginning of June. And two industries (crypto and cannabis)…

Read more »

Dividend Stocks

TFSA Investors: Turn $1,000 Into $10,000 in 10 Years

10-fold growth within a decade is rare but not unheard of. You can capture this growth either by predicting a…

Read more »

Growth from coins
Tech Stocks

Got $1,000? Buy These 3 Under-$20 Growth Stocks to Earn Higher Returns

These under-$20 growth stocks can deliver solid returns in the long run.

Read more »