Dogecoin has seen a recent run of success and popularity after it was added to the cryptocurrency exchange site Coinbase Pro, as I wrote for the Deseret News.
Similarly, tweets from Tesla CEO Elon Musk have also boosted the price of Dogecoin in recent days, as more people flock to the cryptocurrency based on the social media hype.
But does this mean SHIB coin could rise, too?
Will SHIB coin rise because of Dogecoin?
Shiba Inu might see some success, too, because of Dogecoin. Per Yahoo! Finance, SHIB coin has gained some momentum because Dogecoin has been getting some lift.
- SHIB coin will only see more of those opportunities because investors may put more money into the cryptocurrency due to a “sympathy trade,” according to Yahoo! Finance.
- “Shiba Inu’s current market capitalization is about $3.9 billion compared to Dogecoin’s $55.5 billion, and some traders may be willing to bet that Shiba Inu will start to close the gap in case it becomes more popular,” per Yahoo! Finance.
What is a ‘sympathy trade’ in investing?
Per Lightspeed, “sympathy trade” investing refers to when “a trader reacts to news occurring in one security by trading another security that is making a move as a result.”
- So, for example, if an investor sees a dip in Macy’s, they may be hesitant to invest in JCPenney since they’re of a similar market, according to Lightspeed.
Should you invest in SHIB coin because of Dogecoin?
Per Yahoo! Finance, SHIB coin has a chance to rise, riding the wave of momentum from Dogecoin.
- “However, traders should note that Shiba Inu will likely remain dependent on Dogecoin’s dynamics as it is still views as ‘another cryptocurrency with an image of a cute dog,’” according to Yahoo! Finance.