If you think you missed out on Dogecoin's (DOGE -1.05%) incredible price action over the years, don't lose hope. According to the chatter among meme coin investors, there's a successor to the canine meme throne making its way on the Solana blockchain, and it's called Dogwifhat (WIF -1.12%).
As the name implies, Dogwifhat, or "Wif" as it's fondly known in crypto circles, is a friendly meme coin of a shiba inu dog with a nice knitted hat. And with a market cap of more than $2.8 billion, its community of coin holders are already "wif" plenty of profit. But according to the crypto diehards, Wif's march to greatness is nowhere near its conclusion, so let's analyze why it's so popular and whether it has a place in your portfolio.
Why crypto investors can't get enough of this token
Wif's history so far has been auspicious, given that it's a meme coin.
From its launch in late 2023, the project was backed by a handful of the most high-profile investors as well as influencers in cryptocurrency. Its creator is unknown, and is thought to be fully absent as well as fully divested of their holdings. That means they won't be able to dump their tokens and drive the price down, but it also means that there is unlikely to ever be any utility added to the project.
The community of Wif's investors are highly active in propagating the meme, leading it to establish and retain a significant attention share on social media, particularly on X (formerly known as Twitter) as well as on the messaging application Telegram. Now it has nearly 135,000 holders.
Investors from traditional financial institutions like hedge funds and venture capital groups are also piling in. By doing so, they're making a bet that the meme itself will continue to exhibit virality, attracting more coin holders and thus higher prices over time. They're also betting that the coin's community will remain engaged and effective at spreading the meme to populations that haven't experienced it before.
So far, those bets have paid off. Wif has been able to rally and recover after several significant downturns. And in a mark of success that's unique to cryptocurrencies, the coin has spawned a galaxy of copycats and derivative meme coin projects seeking to leverage its branding. Many other projects explicitly seek to be seen as aligned as an ally of sorts with Wif, perhaps in the hopes that some of its investors will be willing to contribute their non-committed capital.
Perhaps the biggest point in Wif's favor regarding it becoming the next Dogecoin or Shiba Inu is that there is an enduring narrative in crypto communities that its path to one-upping the reigning champions is pre-ordained, inevitable, or otherwise guaranteed.
Whether or not this narrative is factual or realistic is beside the point; the important factor is that a group of people persistently say that they believe it.
As Wif's price keeps trending upward over time, at least some of those people are buying the coin, so they are behaving as though they believe it too. And if they succeed in recruiting more investors or convincing others to develop the same conviction, the narrative could easily become a self-fulfilling prophecy, as it seems to have been so far.
The potential rewards outweigh the risks, provided that your other bases are covered
Don't race to buy Wif until you have attended to general financial matters that are more important than taking highly risky meme coin positions.
In particular, make sure that your portfolio is diversified with a mixture of safer and less-safe investments, depending on when you think you'll need your money. If you invest in Wif, there is no guarantee you will ever get your money back, even if you wait a long time, so be very conservative with the amount of your portfolio that you allocate to it. Furthermore, make sure that you've paid down any high-interest debt, and that you have an emergency fund.
Once those necessities are taken care of, it's key to take a moment to understand that despite investors' high hopes for Wif, the coin cannot gain value indefinitely. While it is likely the case that there is a substantial amount of upside remaining, as the meme has barely started to break through into the public consciousness, making an appreciable amount of money with an investment will require you to be patient, and non-reactive to the tremendous daily volatility that the coin experiences.
If making risky purchases keeps you up at night, or if your risk tolerance is low, try dipping your toes with a less risky option in crypto to start, like Solana. Otherwise, if you need to fill out the riskiest segment of your portfolio, it's worth developing a plan for how you want to invest in Wif and when you'll decide to take profits, and then (carefully) dive in.
