Why DigixDAO Coin Soared on a Day Cryptos Crashed
The DigixDAO coin price is shooting through the roof while Bitcoin and altcoin prices nosedive. This has recurred a few times in the past couple of months, sparking investor speculations that DigixDAO may be the crypto world’s safe-haven gold equivalent. After all, it bills itself as a “gold standard” in the blockchain world.
It almost seems true that investors begin to rotate money into DigixDAO every time the market crashes, and away from it as the market recovers. Similar market rotation is seen in traditional markets, between stocks and gold; turbulence in the stock market likewise drives investors toward gold.
On a cursory look, it may seem like the market has found a figurative safety box where investors begin to hoard their money whenever crypto prices face a calamity. But don’t be fooled. We warned our readers back in February why investing in DGD coin right now may be a serious pitfall. That is, at least until the coin is trading at these lofty high prices.
Let me explain why parallels drawn between DigixDAO Coin and gold are in complete error.
Firstly, DigixDAO (DGD) is different than DigixGold (DGX). The former is the cryptocurrency currently traded, which has little to do with gold. The latter is the cryptocurrency that will trade sometime in the future and is touted to be backed by gold.
Then why are investors scrambling to get their hands on DGD?
That’s because according to their developers, DGD will offer coinholders voting rights on the DigixGold platform once DGX coins are released. DGD coinholders will also receive some rewards, which, let me be clear, do not include gold or DGX coins, per se.
The crux of the matter is that DigixDAO—the coin in question here—is not tied to gold in any form just yet. DigixGold may be the coin we could call a crypto gold-equivalent. But until this idea sees the light of day, it is nothing but a whitepaper.
Now, according to the Digix team, the release of DGX coin is due by the end of the first quarter. We’re assuming that means the end of this month.
In the latest update posted by the team three days ago, investors were informed that the final version of the DGX code will be deployed on the Ethereum mainnet this week. (Source: “Digix Dev Update — 13th Mar 2018 : Getting ready for Mainnet, Kyber Network exchange, UI Improvements for Public,” Medium, March 13, 2018.)
Mind you, both Digix coins are built on Ethereum’s smart contract platform. Shifting the code from the testnet to the mainnet simply means that it’s ready for release. So, our guess is that the launch is just around the corner.
This possibly explains why the DGD coin price has been surging. In our view, it had little, if anything, to do with it being deemed as a safe-haven investment.
Also, considering its price volatility, it looks anything but safe. Just take a look at the ebb and flow in its prices in the last one month alone.
Chart courtesy of TradingView.com
We believe that the enormous surge in the DGD coin price is not rightfully justified. While DigixGold may be a revolutionary concept, DGD coin has limited value.
In our view, too many speculators have moved into this space in hopes of striking overnight riches. There’s a good chance that DigixDAO prices may tumble once DigixGold coin is out. Investors are advised to tread with care ahead of the release.