Dogecoin, the cryptocurrency named after a times-old viral dog meme, reached a new each-time high Friday autumn. It now has a roughly $92 billion market valuation, up more than 26,000 % in six months.
The S&P 500 gained 19 percent during the same period, while cryptocurrency competitors bitcoin gained 286 percent and ether gained 698 percent, according to CoinMarketCap. And Tesla, the stock market darling? It has increased by 56% since November.
Dogecoin’s Creation is to Mock Bitcoin
Software engineers Billy Markus and Jackson Palmer created the satirical cryptocurrency to mock bitcoin and the plethora of other crypto professing grandiose aspirations to take over the world in 2013.
Additionally, unlike bitcoin, which has a limited amount of 21 million units, dogecoin currently has no such restriction.
They named it dogecoin – pronounced “doje coin” with a gentle “g” sound – after the Shiba Inu “doge” meme that was once popular. What is its purpose? It is a more “fun” and speedier alternative to bitcoin.
According to Galaxy’s analysts Alex Thorn and Karim Helmy, the appeal of dogecoin has always been its honesty, as they described in a note to clients on May 4. Unlike many other cryptocurrency projects, dogecoin makes no grandiose claims about how it will transform the world.
One of bitcoin’s value propositions is digital scarcity; according to Greenspan, there will be only 21 million coins, but dogecoin has no such hard cap and a genuinely insane inflation timetable.
Elon Musk’s Love for Dogecoin
It is unclear when or why Elon Musk fell in love with dogecoin. Tesla and SpaceX CEO Elon Musk has spent years promoting the token.
Musk is not the only prominent celebrity to endorse the animal-branded token. Mark Cuban, the Dallas Loners, Snoop Dogg, and Kiss bassist Gene Simmons have all openly backed dogecoin. Slim Jim, the beef jerky brand, is also getting in on the action.
Musk’s tweets, which frequently include oblique allusions to dogecoin, continually propel it to new all-time highs. Additionally, these posts have aided in increasing retail investor interest.
Its price increase this week, which one analyst ascribed to Elon Musk’s imminent appearance on “Saturday Night Live” on May 8, even managed to briefly down Robinhood’s trading app.
However, there is more to dogecoin’s record-breaking price run than celebrity endorsements.
Additionally, market conditions have been favorable. Multiple rounds of stimulus cheques have resulted in increased consumer spending. Apps such as Robinhood have made it more accessible than ever for the ordinary investor to place a stock wager. It transforms day trading into a global phenomenon.
Can You Invest in Dogecoin?
Dogecoin is also not a very trustworthy store of money, as this typically needs a long-term faith in the crypto and the blockchain upon which it is created.
Given these constraints, the dogecoin rally appears to be entirely speculative. Dogecoin is valuable because others believe it is beneficial. Additionally, they feel that another party will purchase it from them at a better price.
Mati Greenspan, the portfolio manager and founder of Quantum Economics, stated that they do not see dogecoin’s price increase due to the network’s low liquidity and rapid expansion. He believes that once the network reaches critical mass, that growth rate is unsustainable.
However, everything is not lost for dogecoin’s future.
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