Dogecoin Is Falling Today. Should You Buy the Dip?

Key Points

• The U.S. government could soon shut down if legislators fail to reach a deal.

• The market is slightly down as investors anticipate a shutdown, with riskier assets like Dogecoin being hit harder.

• 10 stocks we like better than Dogecoin ›

Dogecoin (CRYPTO: DOGE) fell on Tuesday, down 4.2% as of 1:12 p.m. ET, as measured from 4 p.m. on Monday. The move comes as the S&P 500 (SNPINDEX: ^GSPC) and the Nasdaq Composite (NASDAQINDEX: ^IXIC) lost 0.2% and 0.3%, respectively.

The meme coin is falling with much of the market as investors anticipate a government shutdown. More speculative assets like Dogecoin tend to see outsized drops when the market is uneasy.

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Crypto investors brace for a shutdown

While a U.S. government shutdown could be avoided, the clock is ticking. Legislators need to pass a funding bill by the end of the day, but both sides of the aisle are playing hardball and refusing to budge. The market seems to be anticipating a shutdown.

Image source: Getty Images.

It wouldn't be the first time -- there have been 14 shutdowns since 1980 -- but a shutdown introduces uncertainty, which often leads to a dip in the market. Investors like stability.

Dogecoin is a very risky asset

Dogecoin's drop today outpaced most of the crypto market because it's a meme coin with no real value. It is highly speculative and built on hype. It really shouldn't be viewed as a serious investment; it is more of a bet.

While today's dip could look like an opportunity to buy, I wouldn't. Dogecoin can fall a lot further. A more serious market event could cause Dogecoin to plummet.

Investors should instead look to cryptos with a proven track record of value and projects with innovative technology. Bitcoin and Ethereum are much smarter plays.

Should you invest $1,000 in Dogecoin right now?

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.