Why Dogecoin is Dominating the Headlinesbitcoin depot
Although 2021 has generally been a great year for the cryptocurrency space, no coin, stock, or asset has had a year as spectacularly profitable as the meme coin, Dogecoin ($DOGE).
Currently sitting on a market cap of 50 billion USD, with a return of over 15,000% in one year, saying Doge has taken the market by storm would be a bit of an understatement at this point. But what is Doge? How did the coin rise so heavily in price and popularity? And what should you expect from the coin in the future?
What is Dogecoin?
First things first, Dogecoin is the textbook definition of a happy accident. Created by software developers, Billy Markus and Jackson Palmer, it is officially defined, according to its website, as "an open-source peer-to-peer digital currency allowing for the transfer of value between two customers."
At least that's what its official cover says.
In reality, Dogecoin is regarded as a meme or joke coin (even by its founders), primarily because of its peculiar tokenomics. Unlike Bitcoin, the supply of Dogecoin is unlimited, making it impossible for it to be a proper store of value. The other elephant in the room is that it has no practical utility, unlike Ethereum ($ETH) and every other coin sitting on the top of the market cap list.
Regardless of this, the coin has witnessed levels of profitability in ways that can only be termed as miraculous. To wit, if you put $1,000 in Doge in January 2021, that initial investment would have been worth over $120,000 by May 2021 when Doge touched its all-time high of $0.73.
How Did Doge Become So Popular And Profitable?
Like all meme coins, the popularity of Doge is purely due to sentiment, serendipity, and things falling in place at the right time, rather than being attributed to any technical planning or superiority over other coins.
Generally speaking, the rise of Dogecoin can be generally pinned down to some major moves in the social media space that created a viral-investing buzz. Here are some of the biggest reasons why Dogecoin took to the mainstream:
The spike initially started on July 2020 during the Coronavirus pandemic when a TikTok influencer hosted a challenge that later went viral, aiming to get Dogecoin to the price of $1. At that time, the coin was a measly $0.000175. By the end of the challenge, Doge spiked to $0.0012, an over 683% increase!
While this is in itself impressive, it was simply a teaser of what was to come in 2021.
GameStop & The Rise of “Memevesting”
Although 2020 saw that significant spike action for Dogecoin, the real miraculous rally started in 2021. Generally speaking, the year 2021 has been an extreme rollercoaster for Wall Street and the investing world in general, with a surprising reversal and anti-system sentiments manifesting into concrete actions for the first time in years.
The peak of this manifested itself in the GameStop ($GME) short squeeze when a large army of retail investors primarily from the popular Reddit community dubbed “WallStreetBets” bought GameStop stocks as a stand against short-sellers who were mostly institutional investment companies and hedge funds. At its height, on January 28, the short squeeze caused the retailer's stock price to reach a pre-market value of over $500 USD per share, nearly 30 times the $17.25 valuation at the beginning of the month.
The massive gains on this movement for individual investors caused a spillover effect which affected the price of other assets and cryptocurrencies, particularly Dogecoin. This ultimately led to a new craze dubbed as “Memevesting” which is the act of huge groups of individuals who invest in funny and ironic stocks as a joke with the intention of getting some quick fortunes and laughs along the way. Fundamental analysis is thrown to the wayside as investors aim for the viral movement to continue pumping the stock prices up while “holding the line” when it begins to dip.
In addition to the general anti-establishment mania in the air, the year 2021 has been generally regarded as profitable for all cryptocurrency, with Bitcoin, Etherum, and other altcoins seeing spectacular rallies and establishing new all-time highs.
And of course, the beloved memecoin, Doge, was not left out. The combination of the game stop event and media influence saw Doge hit $0.07 in January 2021, an 800% increase from its former all-time high.
It’s impossible to talk about the rise of Doge without mentioning the unofficial "Dogefather" himself, Elon Musk. Although it is still unclear if Elon Musk is a friend or foe of cryptocurrency, the CEO of Tesla and Space seems to be fully behind this coin and the memevesting trend in general.
Although no one knows just how much Doge Elon holds, his influence over the coin cannot be denied, with the coin always rising to smash its all-time highs after a positive announcement from Elon on Twitter.
Although the influence of Musk seems to have cooled off a bit on Doge, a spectacular combination of good news, troll tweets, and the bull season mania saw Doge rise from $0.07 in January 2021 to hit an all-time high of $0.73 in May of 2021, with still room to run.
The price of Doge took a plunge to around $0.36 after Elon Musk’s much-anticipated hosting of Saturday Night Live, where Musk admits the coin is “a hustle” in one of his segments.
The Future of Dogecoin
The main question on everyone's mind is, “what’s next?”
Like all cryptocurrencies, Doge is still in the adoption phase, with hundreds of thousands not even aware of what cryptocurrencies are or how to actually use them.
Some experts believe Doge can only go up from here, while others believe the party is over, as the coin has taken a bit of a tumble in recent weeks, falling as much as 40% from its all-time high. There is also the fear of extreme price manipulation from large investors, as 78% of the coin is owned by merely 30 different cryptocurrency wallets. Theoretically speaking, if all these investors sell, the coin could lose as much as 90% of its value.
With the current climate surrounding cryptocurrencies in general, it is highly likely Doge still has some more juice in it and has the potential to touch a dollar before this run is over.
What happens after that milestone is reached is anyone's guess… and who knows, you may just be able to buy some of your own Dogecoin through a local crypto ATM in the future.
May 26, 2021