- Analysts at one investment firm have warned against Safemoon and Dogecoin, two cryptos that have received extremely high traction in recent weeks.
- These coins have no utility and investing in them is like betting on a slot machine, they warned.
The altcoin season is here and investors are making huge returns in weeks, sometimes even days. However, according to analysts in one investment firm, investors should tread with caution. The analysts singled out Dogecoin and Safemoon as some of the riskiest investments. The two cryptos have noted very high gains as a result of the ever-rising social media attention they get.
Dogecoin has been one of this year’s best-performing cryptos – the best in the top 20 coins by a mile. Elon “Dogefather” Musk’s favorite coin has however also been one of the most controversial in that time. In March, another coin joined the high-performing, social media-fueled category by the name Safemoon. Since its launch, it has shot up by over 1,300 percent.
While the gains are mouth-watering, investors shouldn’t bet all their money on these coins, analysts have warned. Speaking to Business Insider, Susannah Streeter, an analyst at Hargreaves Lansdown, a British financial services company, stated:
Gains are being fueled by frenzied chat across social media with influencers jostling for position to push their favored coins.
Streeter’s point is spot on. Dogecoin, for instance, has been almost fully reliant on Elon Musk’s tweets. Just yesterday, he confirmed on Twitter that he is set to include Dogecoin on his Saturday Night Live (SNL) skit. DOGE jumped 10 percent immediately following the tweet. Hundreds of investors also took to social media platforms to reveal they were putting more money in DOGE in anticipation of the SNL skit on May 8.
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— Remya (@Remya28412488) April 28, 2021
“But like a slot machine, the coins being pushed into circulation are very much a speculative bet and investors should only dabble if they have money they can afford to lose.”
Safemoon – is it a safe investment?
Safemoon is the newest kid on the block and it’s attracting a lot of investors. On April 15, the token was trading at $0.000001. Just five days later, it had shot up by 1,300 percent. While it has made investors money, several leaders have warned against it. Lark Davis, a popular analyst and YouTuber pointed out:
Remember just because you make money off of a ponzi does not change the fact that it is a ponzi. #safemoon
— Lark Davis (@TheCryptoLark) April 21, 2021
Edward Moya, a market analyst at Oanda, a crypto platform, warned further, stating, “Many view it as a pump-and-dump coin. Safemoon’s initial buzz started off as many anticipated it will have a similar rise like dogecoin. It seems unlikely safemoon will ever make it to the moon.”
Streeter is also not convinced. She told BI:
Its model appears to be geared towards helping early holders of the currency get rich, as others pile in after them, pushing the price up further. Traders buying in late with the expectation of celestial rewards are likely to be sorely disappointed when the price falls back to earth with a bump.
So, buyer beware as you invest in the cryptos!