Find out why Dogecoin went to the moon and crashed? -MoneyBite weekly newsletter
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Look’s like it is crypto and blockchain products like Non-Fungible Tokens which are ruling the roost. Last week Dogecoin (DOHJ-koyn) – a cryptocurrency that had its value zoom by 400% and has delivered incredible returns of 1900% since the start of the year 2021.
Heard of Bitcoin but what’s Dogecoin you may wonder? Does it sound more like a meme?
Dogecoin is a cryptocurrency that started out as a joke and fun and instant alternative to the age-old banking systems in 2013. And it remained pretty much as an internet meme for 8 years until suddenly interest spiked up. There was a time when a Dogecoin was valued less than a cent (1/100th of a Dollar) and with the last week’s rally, it went up all the way to 12 cents. The market capitalization of this lesser valued crypto skyrocketed to $50 billion surpassing the market caps of the carmaker Ford Motor Corp and Heinz.
What led to the rally behind the Dogecoin?
As Covid hit the world in 2020 and uncertainty started creeping around, equities took a major hit. As usual, gold took the centre stage as a safe haven. There was something else that was assuming equal or more importance – cryptocurrency. Bitcoin tripled its value in 2020 and similar interest was built up around other cryptos.
Around the same time, a Tiktok user, Galante told his 5700 odd followers, ‘’ Let’s get rich’’ by pulling up the Dogecoin to $1. He also apparently said “Dogecoin is practically worthless.” “There are 800 million TikTok users. Once it hits $1, you’ll have $10,000. Tell everyone you know.” This frenzy had #Sending Doge to the moon flooding the internet and the prices went higher. It was much like a Ponzi scheme said many financial experts. Meanwhile, Reddit users also started exchanging Dogecoins and increased the user base.
The biggest push came in the form of none other than Elon Musk, who said that Dogecoin is people’s cryptocurrency and he would literally send it to the moon with SpaceX. Others like the famous singer Snoop Dog and Gene Simmons tweeted in support of the Dogecoin. In March this year, Mark Cuban (of Shark Tank fame), the owner of Dallas Mavericks (an NBA team) allowed payments for tickets and products in Dogecoin much like how Musk allowed bitcoins for Tesla.
Last week, Doge fans created hashtags #Dogeday and #DogeDay420 to post memes and create interest in this crypto. Apr 20th was dedicated as DogeDay. All these took the value and its market cap of Doge through the roof on Apr 20th.
But, the very next day on Apr 21st, the value crashed 30% after the frenzy died down.
Should you invest in such cryptocurrencies?
There may not be much to the fundamentals of such rallies. Investments based on mass frenzy may not hold up at all times and you may end up losing money. Moreover, India and many other countries are planning to come up with digital currencies of their own which may result in cryptocurrencies getting banned. However, looks like meme investing (remember Gamestop?) is here stay as more and more millennials and GenZ enter the investing space.
Have you invested in Dogecoin or other cryptocurrencies, let us know in the comments below.