The Dogecoin rally precedes this weekend’s Saturday Night Live (SNL) show, which will be hosted by Elon Musk, CEO of Tesla and founder of SpaceX.
And some experts believe appearance can send cryptocurrency even higher.
“I predict it could reach $ 1.00,” said Carol Alexander, professor of finance at the University of Sussex Business School. “There will be quite a few people on the coordinated Reddit group who will be happy to take their profits, even if maybe only 30 or 40 percent, because it’s been stable around 60 cents for quite some time. (All prices in US dollars and cents.)
But she added that like most cryptocurrencies, its price will likely drop on Sunday – potentially to 50 cents.
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Dogecoin was launched in 2013 as a satirical critique of the cryptocurrency frenzy. But what started out as a joke has grown into an online craze.
The coin climbed 41% in 24 hours this week, reaching a record high of 69 cents on Wednesday.
It now ranks among the top four digital coins in terms of market value, according to CoinMarketCap. It’s also worth more than FedEx, General Motors, and Nintendo.
A $ 1,000 purchase of Dogecoin on Jan. 1, 2021 would be worth $ 121,052 at Wednesday’s high of 69 cents – a gain of over 12,000%, according to CNBC.
That’s significantly higher than other cryptocurrencies, said Moon Jerin, founder and CEO of Doctrina and industry analyst at the Center for Blockchain Technologies at University College London.
“If you had invested a thousand dollars at the start of this year in Bitcoin, you would have around $ 2,000,” Moon said. “Whereas if you had invested a thousand dollars at the start of this year in Dogecoin, it would have become $ 120,000 by now.”
But Dogecoin is rarely used in trading or payments. Like other digital coins, it is very volatile and its price is heavily influenced by social media users.
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Some players in the cryptocurrency market have said its volatility is its main draw, with a mix of retail investors and market makers fueling its trading volumes.
“The sad truth is that a lot of crypto valuations are separated from reality anyway,” Joseph Edwards, head of research at crypto brokerage Enigma Securities, told Reuters.
“Right now (Dogecoin) is seen as it’s always been seen – an asset with surprising durability that offers opportunities to profit from volatility every year or so.”
Dogecoin, which is pronounced dohj-coin, has an image of a Shiba Inu dog as its logo. The term “doge” comes from an internet meme that gained popularity in 2013, which had a Shiba Inu dog with no-type rainbow-type comic book phrases.
Jackson Palmer and Billy Markus, a pair of software engineers, created Dogecoin in 2013 to poke fun at the hype surrounding cryptocurrencies, such as Bitcoin, according to Business Insider.
But Dogecoin is very similar to Bitcoin, explained Brian Mosoff, CEO of Ether Capital. It is an open-source software-based protocol that has its own currency called “doge” and is a bitcoin clone.
“Bitcoin is open-source. Anyone can access the Internet and copy this code. They can change the recipe and redeploy it, ”he said.
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And in this case, Palmer and Markus changed the Bitcoin recipe and called it Dogecoin. The currency was derived from the open-source software project, Litecoin. Unlike Bitcoin, it has no limit to the number of coins that can be produced in the system.
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“It was meant to be fun, it was meant to be a joke. They put this cute dog on the logo and gave birth to him, not thinking it would be anything. And here we are years later where there is enough buy-ins from different investors that you have a market cap of over $ 70 billion, ”Mosoff said.
Alexander echoed Mosoff’s statement, saying it started out as “anti-establishment” currency – not a way for people to make money, but for people to rebel against banks.
For example, when Dogecoin exploded on Reddit, it became a means of ‘tip’ on the internet (rewarding internet users for doing a good deed).
Investors even used Dogecoin to send the Jamaican bobsleigh team to the 2014 Sochi Winter Olympics, Alexander said.
Why is Dogecoin so popular?
Dogecoin’s popularity can be linked to Musk, Alexander said.
Musk mentioned the digital coin in July when he tweeted, “It’s inevitable” with an image of Dogecoin engulfing the global financial system.
Then in December, Musk mentioned the play in a tweet saying, “One Word: Doge.”
“There is an increasing amount of branding with cryptocurrency. Companies choose crypto as a way to be cool, ”Alexander said. “Elon didn’t choose to tweet about Ether or Bitcoin because that’s not his image. Dogecoin appeals to its image. “
And with Musk’s seal of approval, Dogecoin started to gain traction.
For example, earlier this year, the CEO of Tesla posted a photo of a fictional “Dogue” magazine (playing on “Vogue” magazine), which led to an 800 percent surge in the coin’s price. , according to CNBC.
Other celebrities, like Snoop Dogg and Kiss singer Gene Simmons, have also posted tweets supporting Dogecoin.
While celebrity endorsement has helped increase the coin’s popularity, there is another reason for its liking, experts say.
“You have a bunch of investors who feel like they’ve been shut out of Bitcoin, their ether price… and they’re looking for what else is there,” Mosoff said. “And Dogecoin has a unique value proposition – it has a very large supply of circulation and has a very low entry cost. “
People want to participate in something that doesn’t try to take itself too seriously, he added.
Moon called Dogecoin the “people’s coin,” explaining that it only took a bunch of people, largely on Reddit, to try and send the coin’s price “to the moon,” without the involvement of Wall Street.
“It started out as a joke, a Bitcoin rebel, everything is done in a very unconventional way,” she explained. “It represents decentralization and rebellion.”
Should you invest in Dogecoin?
Currently, Dogecoin doesn’t have much use, Alexander explained.
“It’s no use unless it’s for a grassroots movement of philanthropists who love the idea of trying to make money at the same time as funding benevolent projects like water in Nigeria.”
Critics say the dogecoin price spike is another example of the fever to buy the next big thing that has driven prices up in all investments, and that people who buy now can brace themselves for the pain.
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Even the more widely accepted and considered serious cryptocurrencies are notoriously volatile, with huge price fluctuations, up and down.
“We can expect a lot of newbie retail investors – who may not have the necessary financial resilience – to be burnt out in the Dogecoin frenzy, the same way they did with GameStop,” he said. Nigel Green, general manager of the deVere group, told The Associated. Press April 20.
Like other cryptocurrencies, it is also extremely volatile.
There is no cap on Dogecoin’s supply which means the coin can inflate to infinity. There are only 21 million bitcoins that can be mined in total. However, Dogecoin does not have a cap on its quantity.
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Moon said this could contribute to Dogecoin’s turbulence in the digital market.
“Right now there are around 130 billion and they’re going to keep doing more as people mine more Dogecoin,” Moon said. “And that’s where the issue of volatility comes in.”
But she added that in the cryptocurrency world, there is always a risk.
“Whether it’s Dogecoin or Bitcoin, you’re always investing in what you’re willing to lose,” Moon said.
– with files from the Associated Press and Reuters