Meme Crypto Dogecoin Price Up 400% In 1 Week
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Last week, the Dogecoin price spiked 400%, shooting this cryptocurrency from $0.07 on Monday to a high of $0.43 on Friday. This coin, although initially created as a joke and a sort of anti-cryptocurrency, has a market value of over $40 billion. Although highly volatile, many investors, especially younger ones, enjoyed grabbing Dogecoin through the years. Many even invested in Dogecoin as a joke, rallying to send the Dogecoin price "to the moon." Could the cryptocurrency market be the next GME stock rally?
What is Dogecoin
In 2013, the first Dogecoins came to be. IBM software engineers Billy Markus and Jackson Palmer teamed up to create a payment system that was instant, fun, infinite, and without banking fees. The logo for the coin is a Shiba Inu dog based on the Doge meme from 2013.
This coin quickly fostered an online community and reached a market value of over $5 billion in January. Now, this has skyrocketed to a value of over $40 billion.
At the time, Palmer and Markus decided to create a peer-to-peer currency that was more accessible to a wider demographic than Bitcoin. They also wanted to escape the controversial underpinnings of other cryptocurrencies, especially because they had a history of being used on the dark web. Instead, Dogecoin is a lighthearted coin whose mascot is a Shiba Inu. Its interface is based on Luckycoin and Litecoin’s blockchain protocol. In comparison to Bitcoin, this coin has no market cap, hence why it is considered a joke.
The crypto launched in December of 2013, but that month it also saw a major hack as millions of Dogecoins were stolen. A hacker acquired access to the platform’s filesystem and set up the send/receive page to transfer to a static address. This incident further increased visibility for this coin as people tweeted about it. This prompted the community to create “SaveDogemas” to help those who lost their coins. A month later, people donated enough money to return stolen coins to the victims.
Aside from that, Dogecoin mostly traded quietly within the community as a joke, even attracting the attention of Elon Musk. In fact, some are pointing to Musk as an instigator in this price rally. The famed Tesla CEO jokes about Dogecoin and the Dogecoin price every so often, returning investors’ focus to the cryptocoin. Could the next move for Tesla be to accept Dogecoin as payment just like Bullion Exchanges lets you convert Dogecoin into gold?
Why is the Dogecoin Price Rising?
Similar to the recent stock market rally of GameStop and AMC, another subreddit seeks to pump the prices of cryptocurrencies. This subreddit is known as SatoshiStreetBets, a name that pays homage to the mysterious founder of Bitcoin, Satoshi Nakamoto. Once again, this rally and loosely organized investing frenzy proves Reddits’ potential as the new Yahoo Finance forums for younger generations just starting to invest. The Dogecoin price appears to be one of the subreddit's main targets.
Another major factor for the Dogecoin price rise is the recent launch of the Coinbase IPO. Although Coinbase does not list Dogecoin yet, Coinbase becoming a publicly-traded company is a huge milestone for the cryptocurrency world. Now that major credit companies allow people to trade cryptos, Coinbase becoming an initial public offering is another crucial step forward for the cryptomarket. Its success further grounds cryptocurrency’s reputation as a trustworthy sector with plenty of upside potential. Additionally, Coinbase’s success also goes to show that cryptocurrency can easily be used regularly as more and more institutions and businesses accept it. Will Coinbase list Dogecoin soon? If the coin continues to succeed, perhaps it will.
Finally, BitPay now allows you to trade Dogecoin. All the top cryptocurrencies now available on BitPay include Bitcoin, Bitcoin Cash, Ethereum, USDC, GUSD, Paxos Standard, BUSD, and DOGE. The fact that Coinbase does not yet allow you to trade Dogecoin is a hindrance to the coin and the company. If Coinbase adds it soon, the price of Dogecoin today may not even be its record high. Instead, they missed out on business that Robinhood got instead. People bought Dogecoin through Robinhood and temporarily crashed the service on Thursday.
Is the Dogecoin Price A Bubble?
David Kimberley, an analyst for the UK investing app FreeTrade, told CNBC:
“Dogecoin’s rise is a classic example of greater fool theory at play. People are buying the cryptocurrency, not because they think it has any meaningful value, but because they hope others will pile in, push the price up, and then they can sell off and make a quick buck.”
The risks that Kimberley mentions is if very few people hold, they hold a lot of power in the market. Should they cash out, it won’t take much for the price to dip accordingly. So what should the next step be?
Not everyone wants to cash out, however, they may be ignoring the reality that they could lose all their profits if Dogecoin and other cryptos prove to be a bubble. Many say that Bitcoin is not a bubble because it has so much support, but can Bitcoin be a lifeboat for other coins?
Bitcoin is a finite coin, capped at 21 million, whereas Dogecoin is infinite. This means at any time, the founders could flood the supply to increase their own net worth. This would decrease the price of Dogecoin.
This is exactly why Dogecoin is not a good store of value long-term, and it is what makes the coin a joke. Therefore, you may consider taking your profits and moving them into something more stable. You can even convert Dogecoin to gold, platinum, silver, and palladium. All these assets are much more stable and have not moved 400% in one week and are finite, making them a more secure store of value.
Convert Dogecoin to Gold?
Although the precious metals market and the crypto market appear to be rival industries, there are benefits to holding both. Despite the differences between a digital currency and a physical asset, there is a significant overlap about the purpose behind buying gold and cryptocurrency. At the end of the day, it all comes down to the desire for a hedge against inflation and a method to grow your wallet.
However, the main difference between a gold investor and a Bitcoin investor appears to be age. Younger investors are more likely to buy cryptocurrency than older investors, but there is a slight overlap in both age groups. The argument in support of cryptocurrency is that it is digital and portable. On the other hand, gold is physical and has a more stable history.
Where it stands right now, central banks are buying up gold, meanwhile, major companies and average consumers are moving into cryptocurrency. Therefore, when it comes down to buying one or the other, investors may need to consider their goals and what risks they are willing to navigate. It may be worthwhile for investors to look into their options, or even consider investing in PAXG to get the best of cryptocurrency and gold. But the option to convert Dogecoin into gold is a complete possibility, thanks to BitPay.