Dogecoin, the cryptocurrency whose creators considered it as a joke in 2013, has since skyrocketed in value and popularity. Its value has risen over 8,000% just in 2021 alone. At some points this year, the total value of all circulating Dogecoin in the world has surpassed $50 billion. Dogecoin’s $50 billion market value makes it larger than some of America’s top companies including Marriott, Ford Motor Company, and Kraft Heinz.
Dogecoin Follows Gamestop?
The cryptocurrency’s rapid rise follows the meteoric rise of other assets in 2021. Most notably, it has parallels with the GameStop saga that shocked markets a few months earlier. Propelled by no-fee online trading platforms such as Robinhood and government stimulus checks, everyday traders have been able to participate in financial markets in record numbers.
Like with GameStop, Dogecoin’s price surge has partly been driven by online communities. For example, in April on a day referred to as “Doge Day”, investors organized on online forums to push up the price of the cryptocurrency from 39 cents to $1. Back in January 2021, Dogecoin’s price was less than a penny.
Elon Musk, Snoop Dog and Slim Jim Jump In
Elon Musk, Snoop Dogg, and brands such as Slim Jim also have drawn attention to Dogecoin. Musk has promoted Dogecoin on his Twitter account, with tweets such as “Doge barking at the moon.” Mr. Musk also at one point shared a meme based on the movie “The Lion King” that had the Dogecoin icon of a Shibu Inu dog superimposed on Simba’s face.
Retain investors boasting about their massive gains online have further inspired Dogecoin purchases. One Reddit user posted a screenshot of his Robinhood account displaying his Dogecoin holdings. The picture, which showed a balance of $1,081,441.29, was posted with the caption “Hey guys I just became a Dogecoin millionaire.”
At one point, the heightened investor demand on Robinhood caused a brief outage of their crypto trading systems. Some customers experienced order delays and failures executing trades as a result. Other popular retail trading platforms experienced similar technical glitches due to the volume of Dogecoin trading demand.+
The recent IPO of Coinbase, the most popular virtual currency exchange in the U.S., has facilitated an overall rally in cryptocurrencies. Bitcoin prices spike to $64,000 and ether hit over $2,500 around the Coinbase IPO date.
The History of Dogecoin
Created in 2013 by software engineers Billy Markus and Jackson Palmer, the cryptocurrency is based on the “Doge” meme. The meme depicts a Shiba Inu dog with phrases written on top in colorful, Comic Sans font. Markus and Palmer no longer are working on the Dogecoin project. In fact, Markus sold his entire stake in Dogecoin in 2015, earning him just enough money to buy a used Honda Civic.
There are 129 billion coins in circulation currently. Every year, miners put new Dogecoin and put it into circulation. Unlike bitcoin, there is no hard cap on the total supply of Dogecoins. Dogecoin can be purchased on a variety of trading platforms including Bittrex Global GmbH, Payward Inc.’s Kraken, and Robinhood Financial. However, Coinbase does not currently offer trading in Dogecoin.
As it becomes more mainstream, Dogecoin has slowly become accepted by some online retailers. For example, the Dallas Mavericks basketball team sells merchandise that visitors can buy using Dogecoin. Mark Cuban, the owner of the Dallas Mavericks, stated that they experienced record sales after allowing purchases in Dogecoin.
The surprising market gains that have caused large gains of certain assets in the market has sparked bubble concerns. Many of these assets are highly speculative in nature. Clean-energy stocks, cryptocurrencies and special purpose acquisition companies (SPACs) have absorbed investors. So have stocks of selected companies promoted by online communities.
David Kimberley, an analyst at U.K. investing app Freetrade, comments, “The bubble eventually has to burst and you’re going to be left shortchanged if you don’t get out in time. And it’s almost impossible to say when that’s going to happen. This is doubly the case in the crypto markets where a small group of players often hold a huge chunk of the total number of ‘coins’ in circulation. That means it only takes one person to dump all their holdings for the entire market to tank.”
Many retail investors have not focused on the underlying fundamentals of the businesses they invest in. Rather, many retail investment decisions are being driven by get-rich-quick schemes or bets on speculative booms.
As of April 16, 2021, Dogecoin was on the list of the top five cryptocurrencies by market value. According to data from coinmarketcap.com, the cryptocurrencies with the largest market values are bitcoin, ether, binance coin, XRP, and Dogecoin. For the foreseeable future, it looks like the community of followers and fans will cause Dogecoin to continue to soar in popularity.