Many people got temporarily rich during the Musk/fad induced pump of Dogecoin earlier this year. One such person got branded “the Dogecoin Millionaire” by the media for putting all his money, stocks, and money he didn’t have by buying on margin, into Dogecoin early in the pump and quickly became a millionaire.
Several articles have been written about him over the course of the year, charting both his rapid ascent to millionaire status as well as his fall from millionaire status as the price of Dogecoin plummeted. His story is an excellent example of why your investment strategy should be based on intelligence, not luck.
“The Dogecoin Millionaire”
This man, Glauber Contessoto, based his strategy on luck, and, unlike most with this strategy, he did actually get lucky. For a time. The thing about luck is that it usually runs out. Unfortunately, those who get lucky usually think they will keep getting lucky on the same thing.
Contessoto sold all his investments and put everything he had, which measured in the six digits, into Dogecoin when it was still under 5 cents. He was lucky to get in during the early part of the pump. Likely, most people who tried to jump on the Dogecoin fad came in far after that and are still today holding on to losses in an investment that has no utility. They now hope for another fad-induced pump, which may or may not ever come, and even if it did, would they be smart enough to get out before prices plummeted again?
The longer the “Dogecoin Millionaire” stays wedded to the idea that Dogecoin is the future of money, the more he will miss out on building his wealth.
Contessoto, it would seem, came close to $3 million at Dogecoin’s high of 77 cents in May. As of July 20th, when the crypto market was bottoming, he had $700k in Doge at a price of 18 cents per token. His wealth had collapsed 76% in two months.
Disregarding whatever money he has sunk into Doge in the meantime (he has stated he is continuing to put his money into this meme token), at today’s current price of about 27.5 cents, he probably has just over a million dollars. Not much more than a third of what he had at Dogecoin’s peak.
His success was getting lucky; his failure is now not understanding that he got lucky on a bad investment.
The Fall of the Doge
It is entirely normal for cryptocurrency to go through such extremes of volatility. But Dogecoin is a meme token which means it has no use. It is one of thousands of cryptocurrencies that have no use in the world but simply exist for traders to make money off their volatility. These types of cryptos are well known for losing value over the long term. Dogecoin is still 65% down from its all-time high, while Bitcoin, Ethereum, and various other major and useful cryptos are at new all-time highs this month and looking to continue pushing higher in the near term.
Dogecoin collapsed and has been going sideways for five months while Bitcoin and the crypto market, in general, have been rapidly expanding. Dogecoin is getting left behind. This was always going to happen after a fad-induced pump. The “Dogecoin Millionaire” has been watching his wealth go nowhere once the luck ran out. There are many great investments he could have put his money into to keep it growing long term.
This is why you don’t buy s**tcoins, meme tokens, fad investments — aka useless assets. Or if you do and are lucky enough to get lucky on it, you get out quickly before your luck runs out.
The longer the “Dogecoin Millionaire” stays wedded to the idea that Dogecoin is the future of money, the more he will miss out on building his wealth.
Lessons to Learn
As Bitcoin continues becoming humanity’s global currency and store of value, and as Ethereum and other platforms continue sucking up monetary value as smart contracts march on their path to the mainstream, fad-pump meme tokens like Dogecoin will move in the collective consciousness from noteworthy to footnote.
The “Dogecoin Millionaire” made a very risky bet and got very lucky. That made him a millionaire. That’s fantastic. But since then, his wealth growth has entirely stalled because his investment strategy was based on luck. Luck always runs out. If he wants to continue growing his wealth and secure it for the future, Bitcoin should be the core of the “Dogecoin Millionaire’s” financial strategy. He can still use some of that money for risk-based investments on other cryptos — ideally useful ones, not meme tokens.
The whole market is expanding rapidly. As a fellow crypto investor, it pains me to see someone so stubbornly stuck on a s**tcoin. You see this sort of mistake all over the internet in crypto discussions. Anytime I write an article that points out bad cryptos that are terrible investments, I get a barrage of insulting comments telling me how stupid I am for saying anything bad about whatever cryptocurrency they’ve tied like a sinking anchor around their financial future.
Despite hitting it big, the “Dogecoin Millionaire” is now content to let his wealth go sideways as everyone else is making large amounts of money. His story is quickly going from one of amazing luck to a tale of what not to do.
The Classic S**tcoin Trap
As a new crypto investor, he didn’t know better. He got caught up in one of the classic traps of crypto noobs — buying a s**tcoin on a pump and getting lucky and letting that short-lived success bias oneself into thinking the random crypto they purchased is the future of money.
This is a surefire way to get really excited for a few months and then spend years watching your wealth decline as everyone else in crypto keeps getting richer. You see these sorts of crypto has-been coins all the time being shilled by the unfortunate, who formed their opinion of crypto during an altcoin fad cycle and are never able to see straight in the market.
These has-been cryptos go by names like XRP, BCH, BSV, NANO, XLM, DASH, EOS, IOTA, NEO, and many others. The hallmark of all these coins is that once got heavily promoted and had a large price peak, but then they either never reach their peak from past bull markets and keep losing value long term, or at the very least they are long term going toward zero against Bitcoin as their price appreciation drastically slows against Bitcoin and the market as a whole.
None of the has-beens listed above have come anywhere near their peaks from the 2017 bull market, despite the crypto market now being almost four times the size of its peak back then. S**tcoins lose massive value against the market as a whole, and the more time that passes, the worse it gets. This is, unfortunately, the future of the “Dogecoin Millionaire’s” story as long as he sticks to his guns.
Bitcoin, not Memes
While Bitcoin and Ethereum are both up almost 3.5x from their 2017/early-2018 peaks, the has-been cryptos mentioned above are all at half or less of their price peaks from four years ago. In general, there are thousands of failed, has-been cryptos. Now we can add DOGE to the list (though to be fair, Dogecoin was created as a joke, and it has certainly succeeded at being that, but as far as the people who subscribed to the idea that Doge is the future of crypto — it has most certainly become a complete failure, as everyone else knew it would), and other dog meme tokens like SHIB won’t be far behind getting added to the list.
The financial revolution that Bitcoin started is seen mainly in Bitcoin, but also in smart contracts in general, not meme tokens and other random altcoins that were the fad of the month at one point. You build long-term wealth by strapping on to the revolution, not following fads into irrelevance.