Launched in 2013 as a satirical critique of the cryptocurrency frenzy, it is now the sixth most widely used cryptocurrency in the world.
The last week was a real roller coaster for cryptocurrencies, including the one known as dogecoin.
Behind a series of movements in the value of dogecoin are the billionaire and SpaceX and Tesla CEO Elon Musk.
— Elon Musk (@elonmusk) May 13, 2021
With two tweets he was able to make the value of this cryptocurrency fall and a few days later, with a new post, give it a new boost in the digital financial market.
Working with Doge devs to improve system transaction efficiency. Potentially promising.
— Elon Musk (@elonmusk) May 13, 2021
What happened to dogecoin?
Cryptocurrency prices have broken a new record, thanks to a meme. Dogecoin has set a new record, thanks to its market cap exceeding 50 billion dollars after its social media followers used hashtags such as #dogecoin and #dogeday to fuel a rally in the cryptocurrency.
An 8,000% price surge so far this year has seen dogecoin, which was launched in 2013 as a satirical critique of the cryptocurrency frenzy, overtake more widely used cryptocurrencies such as Tether to become the sixth largest coin.
While dogecoin, whose logo features a Shiba Inu dog at the center of the meme, represents only a fraction of bitcoin’s 1 trillion dollar value, it can be traded on crypto exchanges and the most popular trading apps.
“The Doge rally represents an interesting convergence,” said Diana Biggs, CEO of crypto startup Valour, after dogecoin’s price soared more than five-fold in the last week to a record high of 0.42 dollars, according to CoinMarketCap.
It’s inevitable pic.twitter.com/eBKnQm6QyF
— Elon Musk (@elonmusk) July 18, 2020
“A meme coin created as a joke for early crypto adopters, whose community found this kind of thing to be fun, now finds a new generation of retail investors for whom memes are a native language,” Biggs added.
Dogecoin fans used the hashtags #DogeDay and # DogeDay420 to post memes, messages, and videos on Twitter, Reddit, and TikTok, referring to the informal April 20 holiday to celebrate cannabis which is marked by smoke-ins and street parties.
#DogeDay hashtags help meme-based cryptocurrency Dogecoin hit new high 🚀🪙📈
— Anna Irrera (@annairrera) April 20, 2021
Dogecoin’s rise has come amid a surge in online trading of stocks and cryptocurrences by retail investors, stuck at home –with extra cash– because of the Covid-19 pandemic, but it has not coincided with a growth in usage of the coin for payments or in commerce.
The same trend has spurred a boom in usage of online trading apps like Robinhood, and also fueled the social media driven rally in GameStop Corp stock that pitted small investors against hedge funds earlier this year.
“It’s an extension of the same phenomenon that’s led Tesla stock to be valued well beyond its fundamentals, and more recently, to GME’s (GameStop) short squeeze,” said Ajit Tripathi, head of institutional business at decentralized finance startup Aave.
Like other cryptocurrencies, Dogecoin’s price is heavily influenced by social media users, including Tesla CEO Elon Musk, whose tweets about the cryptocurrency in February sent its price soaring over 60%.
“If this goes as planned and everyone, including Mr. Musk, goes ahead and just pours money into Doge on April 20, all at once, Doge will reach prices that originally weren’t even conceptual,” a TikTok user said in a video promoting the coin.
Agustín Rosa, author of the book Juego del dinero (Money Game), suggests the following advice and strategies to prevent deception:
Validate the investment with a trusted financial advisor before making a hasty decision to send the money.