Dogecoin (CRYPTO: DOGE) is the undisputed king of the meme coins, with a market cap of around $56 billion. The coin has been on a roaring rally since late last year, rising 355%, and, with the Trump administration signaling a serious pro-crypto bent, it's no wonder investors are interested in making big gains with a purchase.
Is it possible to make a decent amount of $10,000 with a timely investment in this meme, even if your initial capital is on the small side? Yes, it is – but only if you invest deliberately rather than reactively, and only if you avoid three key mistakes that are very easy to make if you don't plan in advance. Let's go over each one so you can get the best possible odds.
The first mistake to avoid when investing in Dogecoin is buying or selling it because you heard that a famous person recently bought or sold it. It doesn't matter if Elon Musk is talking about his position in the coin yet, or if your favorite investment influencer is saying to buy it, even if it's really yours. Here's why.
To be a serious investor, you need to develop yours investment thesis. There is no substitute for doing your own research and developing your own opinion, whether the asset in question is Dogecoin or a stock you expect to hold for 30 years. Studying other people's opinions and hearing their arguments can be part of that research process.
But that's a far cry from hearing that someone else has taken action and then copying them. It is entirely possible that the other person is acting out of emotion rather than careful strategy. And it is almost certain that they started their investment at a different time, and that they had different financial goals for it.
It is advisable to follow the trend with Dogecoin and other meme coins. Being a follower — someone who cannot organize their own management of the investment — is not. Note: The less you listen to noise coming from investors or popular influencers, the easier it will be to hold your position in the long run.
It's easy to get overwhelmed when looking at the Dogecoin price chart, or the value of your holdings from the coin. It's certainly quite volatile, which equates to a more emotional investing experience no matter how you slice it.
But making $10,000 with Dogecoin is not an attainable goal in the short term unless you are willing to put a significant amount of capital at risk at a possibly less than ideal time. That means focusing on the price on any given day is a mistake, as you'll be more likely to experience fear of missing out (FOMO), or worse, simple fear that the price will drop. And fear will drive you to fumble your investment, or to enter it at the worst possible time.
To avoid making this mistake, simply zoom out. This meme coin has proven that it will still be alive 10 years from now. There is absolutely no rush to invest in it today, or tomorrow, or even next month.
Add the coin to your watchlist. then, use patience strategically to wait for a period when nobody is talking about it, usually after its price has fallen by 80% or more in the previous months. That's the time to start dollar cost averaging (DCAing) your situation with gusto.
Ultimately, the recovery of the coin will increase the value of your investment to you. But that result is only possible if you stop thinking about what its price is doing in any given short period.
When the price of a meme coin like Dogecoin starts to go parabolic, as it did in late 2024, and will likely do again at some point, the emotion of euphoria can quickly overwhelm the holders .
It's nice to feel good that your investment is working. Nevertheless, euphoria almost always creates a tremendous temptation to make bad financial decisions, especially with assets that may feel like they are going to the moon, like Dogecoin.
During periods of euphoria, prices are at their highest, and increase at their fastest pace. The most common mistake driven by euphoria is buying more coin than is warranted. Buying at higher and higher price points means that you are much more likely to see your investment go underwater as soon as the price peaks and starts to fall again. So don't do it.
Furthermore, there is no excuse for focusing your portfolio on Dogecoin or any other meme coin; you need to keep diversifying your portfolio even if one of your investments is exciting.
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Alex Carchidi does not have a position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
