- “Honestly, do you want to talk about [dogecoin] because it hurts?” crypto trader Scott Melker said.
- Melker, aka the “Wolf of All Streets”, unpacks why the dogecoin trade is loved by the crypto community.
- He shares how he played the trade recently and 2 tips for getting started in trading.
- See more stories on Insider’s business page.
Since the start of the year, joke cryptocurrency dogecoin (DOGE) has surged 6,800% and over the past 12 months has surged by 15,600%.
But for legendary crypto trader and influencer Scott Melker, dogecoin is a sore spot.
“Honestly, do you want to talk about [dogecoin] because it hurts?” he said.
Melker predominantly focuses on crypto investing, with 70% of his portfolio allocated to long-term strategies.
He believes those with “strong hands” tend to do best in making money in crypto – a reference to those that buy and hold their position, no matter what. But that doesn’t mean there aren’t plenty of other kinds of opportunities out there.
“I would say that if you’re extremely knowledgeable, and you’re a decent picker of those smaller cap coins, you can literally do 100 times your money on one of those in a week,” said Melker, in the recent interview. “Taking a few of those opportunities with a smaller amount of your capital becomes very meaningful.”
One very effective strategy for a long-time was the dogecoin trade, Melker said.
Dogecoin is currently the midst of a massive cycle at the moment. In part, this is down to the sudden surge in popularity of cryptocurrencies and the fact dogecoin is a good entry point into the market, as it’s worth less than $1 and has plenty of social media prominence, given its link to the well-known Doge meme.
Tesla CEO Elon Musk has also played a role in the surge as he frequently makes references to dogecoin going to the moon, despite the fact the cryptocurrency hasn’t been worked on by developers since 2013.
-Elon Musk (@elonmusk) May 9, 2021
The crypto community loved the dogecoin trade even before Musk got on the scene.
Smaller versions of this cycle were very frequent, Melker said.
“That was the beauty of doge and why everyone in crypto loved it,” Melker said.
Investors could buy dogecoin when it was very low, for fractions of a cent, wait a couple of months and it would see huge rises in price, sometimes gaining as much as 10 times in value, before subsiding.
“It’s very predictable and took a couple months, but it was the best way to make money and the most reliable in crypto,” Melker said.
At one point, Melker owned 10s of millions in dogecoin, if not more.
“I did it again [recently] and I traded against Bitcoin, when it was all the way down a few months ago,” Melker said. “Even in my newsletter, I was like, ‘hey you know, doge [will] probably cycle again,'”
But Melker sold it when it reached the top of the normal cycle at just under a cent. It’s now trading at around 40 cents.
“It just continued and obviously went up another 70 times from there, or something absurd,” Melker said. “But I don’t fault myself for making decisions based on information that I don’t have. And if you do that as a trader, you’ll drive yourself absolutely insane.”
Melker doesn’t beat himself up for missing the trade because he’s aware dogecoin doesn’t have any fundamental value and therefore he can’t touch it at those prices.
“It’s absolutely a joke, it’s a beautiful joke, a beloved joke in the community,” Melker said. ” … And I think it’s amazing for people who admit to themselves that they’re gambling and having fun … if you know that you’re going to go and risk a certain amount of money, and you’re doing it for entertainment, that’s great.”
Dogecoin and other small-cap tokens can be an easy entry point into the world of crypto. These are Melker’s two top tips for anyone that is interested in getting into the game:
1) Do your homework – get good information
You can’t look anywhere without finding information about crypto at this point, Melker said.
“Crypto core publications are probably the first and safest place to get reliable knowledge that is not tainted by somebody’s own position,” Melker said.
For on-chain metrics, which can be used to analyze the fundamental factors of cryptocurrencies, Melker relies on Into The Block for his own newsletter.
After taking those steps, then join the crypto community, whether that’s through YouTube, or deeper down the rabbit hole with Twitter, newsletters and podcasts, Melker said.
“There’s just endless information on crypto in the market right now,” Melker said. “It’s very easy to find and I think the mainstream is being served that information, whether they like it or not at this point.”
2) Learning from your mistakes – everyone makes them.
“If you can’t learn from your own mistakes, you shouldn’t be trading at all,” Melker said.
One way to learn from previous mistakes is by maintaining a trading journal, as it enables traders to take ownership of their transactions by putting them down on paper.
Without a trading journal, it’s very easy to lie to yourself and not take personal accountability, Melker said.
“If you write down your trade plan before you take it and say I took the trade here, there is no way to lie to yourself about the fact that you decided to change mid-trade,” Melker said.
“And you can’t hide that from yourself if you keep a trading journal,” Melker said. “So I think it’s really, really essential, because you’ll never learn unless you record them.”