Investors were incredibly optimistic about the prospects for some of the most speculative cryptocurrencies back in 2021. That raging bull market was propelled by the meme stock craze that also took over digital assets.
Dogecoin (DOGE +1.48%) benefited tremendously that year, although things have cooled down a lot since then. But even with its price being 77% off its all-time high, this token has skyrocketed almost 8,000% just in the past five years, with a particularly strong surge just in the past few days.
With renewed enthusiasm for Dogecoin in the last couple of weeks, is this the best cryptocurrency to buy with $1,000 right now?
Betting on hype
CRYPTO: DOGE
Key Data Points
Although Dogecoin is one of the oldest cryptos out there, having been launched in 2013, it doesn't bring anything valuable to the table. In fact, the founders created the token as a joke. But it's hard to deny Dogecoin's monumental rise to become the ninth most-valuable blockchain network today, with a market cap of $24 billion.
Back in 2021, Dogecoin caught fire because there was a lot of hype surrounding it. Notable business figures -- like Tesla founder and Chief Executive Officer Elon Musk and Dallas Mavericks minority owner Mark Cuban -- would mention Dogecoin publicly, which would lead to huge price spikes. The EV maker and Cuban's NBA team even allow payments to be completed in Doge tokens for certain products.
If the only reason you're interested in buying Dogecoin is because you expect the price rise to continue, with no fundamental reasoning supporting this perspective, then this is speculative behavior that's more like gambling than true investing. It's very risky to put hard-earned savings behind this digital asset.
That's especially the case when you consider that only 19 active developers are working on advancing Dogecoin's functionality. Out of the top 100 cryptocurrencies for developer activity, this ranks 90th.
It's difficult to be optimistic about Dogecoin's prospects over the long term. I believe there's even a meaningful probability that it won't even exist a decade from now.
Scarcity is key
CRYPTO: BTC
Key Data Points
It's easy to get caught up in the hype, but it's best to remain focused on what really matters, and that's logical reasoning and a long-term mindset. With this mental framework, it's clear to me that the best cryptocurrency to buy with $1,000 isn't Dogecoin, but Bitcoin (BTC 0.11%).
There's a strong argument to be made that Bitcoin solves an actual problem people face everywhere. It allows anyone to send money digitally to someone anywhere in the world directly, without the need for an intermediary.
Moreover, Bitcoin is a new way to store value without any counterparty risk. In countries that have strict capital controls or authoritarian regimes, this is extremely valuable.
Whereas 10,000 new Dogecoin tokens are mined every single minute, there will only ever be 21 million Bitcoin tokens in circulation. This absolute scarcity is in stark contrast to the constantly debasing fiat currencies across the globe.
Since the start of 2023, Bitcoin's price has soared roughy 300%, and the momentum has continued so far this year. But there could be strong gains on the horizon.
The current value of all the world's gold is roughly $14.5 trillion. Bitcoin possesses superior properties compared to the precious metal. Not only that, but in a society that is becoming more digitized and internet-enabled, it's not unreasonable to assume that the crypto's current market cap of $1.3 trillion could match gold's total value one day, resulting in 1,000% upside from here.
With $1,000 ready to invest, there's no doubt that Bitcoin is the best crypto to buy and hold.
