Dogecoin (DOGE 3.90%) and Shiba Inu (SHIB 4.85%) Have Been Punished. Should You Buy the Dip?

Dogecoin (CRYPTO: DOGE) and Shiba Inu (CRYPTO: SHIB) have been battered recently, and it seems fated that these coins might make another attempt at high prices at some point in the future. But does that mean you should buy the dip with your hard-earned cash today in anticipation of that?

If Dogecoin and Shiba Inu were worth buying, they would need to meet several criteria as part of their investment theses.

First, they would need a clear mechanism by which they generate value and pass that value on to investors.

There's a big problem here. Neither of these two coins can gain in value by anything other than investor sentiment and, more generally, speculative betting on their future prices.

As price creates sentiment and vice versa, the fact that their prices have fallen recently bodes poorly for their prices during the near term.

Second, these coins would need to have a value that could be expected to hold up over the long term.

On this point, the picture is actually a bit more favorable for Dogecoin and Shiba Inu. They've both been around long enough for investors to expect that they will still be actively traded five years from now, as time hasn't ground them to zero, and there are enough holders that the further passing of time probably won't either.

Part of the reason that is true is that they both have a brand value of sorts, stemming from their legacy as meme coins whose values went to the moon (and back) more than once.

Finally, and this is the hardest of all, to be worth buying, there needs to be a justification for allocating your scarce capital to these coins rather than a significantly safer alternative crypto investment, like Bitcoin (CRYPTO: BTC).

During the past five years, that coin's value increased by more than 1,000%. Are you sure that buying Dogecoin or Shiba Inu right now would match that?

The real dip is yet to come

One of the magical things about meme coins is that their price can go down by 60% in a few months, only to then drop another 60% in the next few months, and then again, until your money is almost entirely gone.

Most investors would then proceed to sell the coins at the very bottom, locking in their losses.

Neither Dogecoin nor Shiba Inu have a solution for those two problems. They've both exhibited that same price volatility, much to investors' chagrin. They will do so again, too.

You could easily buy this dip for both coins, only to see their prices fall even further.

But what if you bought the next dip, too? Eventually, you'll run out of spare capital and be sitting on hefty losses. If you were then patient, the coins might recover during a speculative binge, which would give you a chance to sell.

But hope is not an investment strategy.

Nor is timing the market by buying these coins when their prices appear to be fully bottomed out. By doing that, you're denying yourself the possibility of taking the same action with a safer asset like Bitcoin, which is far more likely to recover, and doesn't need a feverishly speculative environment to flourish in the long term.

And there's no guarantee that you'll time your purchases accurately, either.