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Scott Pape, better known as the Barefoot Investor, has issued a word of warning to his followers who are considering investing in the red-hot cryptocurrency Dogecoin.
Dogecoin, a digital currency created by Australia’s Jackson Palmer that was launched in 2013 and takes its logo from a popular meme known as Doge, has seen its value soar to record heights in recent days.
Musk, who has over 53 million Twitter followers, is hosting popular American TV show Saturday Night Live this weekend and this appearance — combined with Musk’s regular tweets about Dogecoin — has seen its price skyrocket.
Investors who held $US1000 ($A1280) of the currency on January 1 would have $US112,500 ($A144,500) in their wallets as of Wednesday night.
It’s incredible growth but best-selling financial advice author Pape, in an email to his subscribers late last month, could not have been more emphatic in his rejection of Dogecoin as an investment play.
While conceding Dogecoin was the best-performing cryptocurrency over the past six years — far outstripping the likes of Bitcoin and Ethereum — Pape noted it was “set up as a piss-take by its Aussie founder” and had “zero tangible value”.
“It is worthless,” he wrote. “So do I feel a twinge of regret for not getting in? No.
“For much the same reason that I’ve never contemplated putting one per cent of my net worth into the pokies (Just in case, you know, I win the jackpot).
“Here’s the point: Life is really hard when you believe you can make a quick buck from magical dog memes.
“It’s stressful being a gambler. There is no skill involved, and the odds are stacked against you.
“You see, in order to make real money you have to sell. And every man and his dog is planning to sell out of Dogecoin right at the top. Every single one of them.
“It’s called the ‘greater fool theory’ (i.e. you only win when some greater fool buys in at a higher price), and history is littered with people who abruptly discovered that they in fact were the fool.”
“If you’re persuaded to sell your boring index funds and lay down with dogs, I can almost guarantee you’ll eventually end up with financial fleas,” Pape added.
After pumping up Dogecoin’s popularity for months, Musk also warned investors to be wary of cryptocurrencies ahead of his Saturday Night Live debut.
“Cryptocurrency is promising, but please invest with caution!” the Tesla CEO tweeted early Friday morning.
The rare investment warning from Musk comes as the price of Dogecoin — a cryptocurrency represented by a Shiba Inu meme — has soared to about 60 cents per token, according to CoinDesk data.
It’s up a whopping 10,400 per cent since January 1, CoinDesk data shows.
“Dogecoin is surging because many cryptocurrency traders do not want to miss out on any buzz that stems from Elon Musk’s hosting of Saturday Night Live,” Edward Moya, senior market analyst at Oanda, wrote on Tuesday.
— with New York Post