It's hard to argue with Dogecoin's (DOGE 0.37%) performance. In the past five years, this cryptocurrency has skyrocketed 8,740% (as of Sept. 30). It has taken its owners on a roller coaster ride, but the returns have been truly magnificent.
Right now, Dogecoin trades 66% below its record, established in May 2021. Should investors take advantage of the dip and spend $1,000 to buy this dog-inspired meme token right now?
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Betting on community support
Dogecoin was created in 2013 as a joke to rival Bitcoin. It deserves credit for building a strong community of supporters that has driven its market cap to $35 billion. However, when it comes to legitimate use cases, Dogecoin is lacking.
One key data point to keep in mind is developer activity. A report by Electric Capital reveals that Dogecoin is 97th on the top-100 list of blockchain networks when it comes to the total number of developers working on it. This is a bearish indicator, as it points to a low probability of critical innovation and advancements.
Buy the proven winner
The only market participants that should bet on Dogecoin are speculators looking to make a quick profit. The true long-term investors out there will have no problem avoiding this token. Compared to today, there's a very real chance that Dogecoin will be worth less five or 10 years down the road.
When allocating $1,000 in capital to cryptocurrencies, it's a smart idea to focus on a proven winner like Bitcoin.
